Year Sales 1 270 Growth versus Prior Year 12.5% EBIT (10% of Sales) 27.00 Less: Income Tax (20%) (5.40) Less Increase in NWC (12% of Change in Sales) 3.60 Free Cash Flow 18.00 0 240 OA. $15.25 OB. $27.45 OC. $7.62 OD. $13.72 2 290 7.4% 29.00 5.80 2.40 20.80 Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to an industry growth rate of 5% in year 4. The spreadsheet above shows a simplified pro forma for Banco Industries. If Banco industries has a weighted average cost of capital of 12%, $40 million in cash, $60 million in debt, and 18 million shares outstanding, which of the following is the best estimate of Banco's stock price at the start of year 1? **** 3 310 6.9% 31.00 6.20 2.40 22.40 325.5 5.0% 32.55 6.51 1.86 24.18

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