1. Bobcat Cos most recent free cash flow was $4 million. Its WACC was 15%. What is the estimated value of operations if Bobcats future FCFs are expected to grow at a constant annual rate of

a. -5%

b. 0

c. 5%

d. 15%

2. Smart Office is a fast-growing supplier of office spaces. Financial analysts projected its free cash flows for the next three years are -$20, $30, and $40 million and it will grow at a constant rate of 4% after Year 3. Its weighted average cost of capital is 12%.

a. What is the horizon value?

b. What is the current value of operations?

c. Smart Office has $10 million invested in markable securities, $100 million in debt, $50 million in preferred stock, and 10 million shares of common stock. What is the intrinsic price per share?