New information for Gamma Systems Manufacturing Corporation has been brought to management's attention. Use the financial statement information in Problem 5 and take into consideration that sales will grow at a 15 percent rate in 2011 and at a 10 percent rate in 2012 before settling down to a 6 percent perpetuity growth rate in 2013 and thereafter.
A. Estimate the free cash flows available to equity investors for 2011, 2012, and 2013.
B. Estimate the terminal value of all future equity cash flows at the end of 2012.
C. Estimate the equity value of Gamma Systems at the end of 2010 under these assumptions.