1)

Shooze, Inc. had a free cash flow (FCF) of $100M at the end of last year. The FCFs are expected to grow at a constant rate of 5% over the next two years and then at the constant rate of 8% per year thereafter. The weighted average cost of capital is 12%.

The value of the debt is $500M. There are 40M common shares. Find the intrinsic value of the stock.

2)

A bond will mature in 15 years. It has a face value of $1000 and a 4% coupon rate. The yield is 3.8%. Compute the bonds price.