Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:

Year 1 2 3 4 5 FCF ($ millions) 52.2 68.7 77.2 75.6 80.5 After then, the free cash flows are expected to grow at the industry average of 4.1% per year.

Using the discounted free cash flow model and a weighted average cost of capital of 14.9%:

a. Estimate the enterprise value of Heavy Metal.

b. If Heavy Metal has no excess cash, debt of $306 million, and 42 million shares outstanding, estimate its share price.

AppendixLO1