Financial Information on Little Stone

Financial information on Little Stone Company: | | | | | | | | | | | | | |Beta | | | | | |1.5 | | | | | | | | | | | |Stock market risk premium | | | |11% | | | | | | | | | | | |Risk free rate | | | | |3% | | | | | | | | | | | |Current interest rate on debt | | | |15% | | | | | | | | | | | |Tax rate | | | | | |33.30% | | | | | | | | | | | |Debt | | | | | |50% | | | | | | | | | | | |Shares outstanding | | | | |2.5 million | | | | | | | | | | | |Debt outstanding | | | | |$1,500,000 | | | | | | | | | | | |Forecasted gross profit margin | | | |25% | | | | | | | | | | | |Current year free cash flow (FCF) | | |$2 million | | | | | | | | | | | |Excess cash | | | | |$0.5 |million | | | | | | | | | | |LSC’s 5-year forecasted FCF growth rates |10% increase in the next year, 15% increase in the next two years and 12% thereafter |12% for another 2 years | | | | |

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|0 |1 |2 |3 |4 |5 |6 | | | | | | | | | | |Growth | |10% |15% |15% |12% |12% | | |Cost of equity | |19.5% | | | | | | |2 |2.2 |2.53 |2.9095 |3.25864 |3.6496768 |3.795664 | |Cost of debt | |15% | |After tax cost of debt |10.01% | |PV(FCF) |$9.48 | | | | | | | |weight of debt | |50% | | | | | |TVFCF |35.30029 | | | | | | | |weight of equity | |50% | | | | | |PV(TFCF) |17.74057 | | | | | | | |WACC | | |14.75% | | | | | |P0 |$27.72 |E0 |$26.22 | | | | | | | | | | | | | | | | |Pe |$10.49 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

  |Year 1 |Year 2 |Year 3 |Year 4 |Year 5 | | | | | | | |Operating Cash Flow after tax |69 |65.7 |-2.7 |33.9 |67.9 | | | | | | | |Capital Expenditures |1.8 |4.2 |0.2 |3.8 |4.7 | | | | | | | |FCF |67.2 |61.5 |-2.9 |30.1 |63.2 | | | | | | | | |67.2 |61.5 |-2.9 |30.1 |1123.84 | | | | | |...