1.Why do we use free cash flows, instead of profits, when evaluating the value of a company?2.Explain what is the WACC in simple terms, and what its role in valuation3.Based on the SAITO Solar case and the estimate of Mr Suzuki of 1-3% growth rate for the next twenty years, how much would SAITO be valued at? Be reminded that the owners have set a required 10% rate of return.4.In general, describe how to estimate a company’s valuation when the free cash flow are uneven the first years, but later stay constant thereafter.5.Refer to the Appendix 3: free cash flow forecast. Assume 9-11% WACC, and a terminal value of 1-3% growth rate. What would be the range of values for Saito Solar?6.Think from a strategic point of view, should Mr. Saito – and partners – sell the firm? Explain why.
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