The share price could be separated into two components; $9.51 the present value per share of expected free cash flows from 2013 to 2018 plus $20.68 the present value per share of the company's terminal value calculated at the long-term cash flow

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– Change in NWC + Depreciation

Then we calculated the terminal value of Teuer Furniture at 2018 using the proposed long-term cash flow growth of 3.5%. Finally, we discounted all FCFs along with the terminal value to present value using the proposed cost of capital of 12.1% to reach at the value of Teuer Furniture Company as a whole ($300,276). Since, Teuer Furniture has no debt in its capital structure; therefore, this value is the same as the value of owners' equity of Teuer Furniture. Hence, by dividing this value by the number of shares outstanding (9,945 shares), we obtained a price per share of $30.19.

In conducting the previous analysis, we used different assumptions mentioned in the case. For example, to forecast sales at the store level by year, old, and new, we used the arithmetic mean of corresponding historical growth rates in sales adjusted by the total furniture sales' growth rate in the same year in order to account for the industry shocks. We applied the same process to forecast costs such as COGS, SG&A, and Advertising but without the adjustment for total furniture sales' growth rate since it was taken into account with calculating sales. Corporate expenses as a 5% of the same year sales as