1) Slalom Corporation retains and reinvests all its earnings. So, Slalom does not pay any dividends, and it has no plans to pay dividends any time soon. A major pension fund is interested in purchasing Slaloms stock. The pension fund manager has estimated Slaloms free cash flows for the next 3 years as follows: $5,000,000, $9,000,000, and $12,000,000. After Year 3, free cash flow is projected to grow at a constant 4%. Slaloms WACC is 10%, the market value of its debt and preferred stock totals $27,272,727, Slalom has $10,000,000 in non-operating assets, and it has 5,000,000 shares of common stock outstanding. Based on this information answer the following questions:

A) What is the value of the company?

B) What is the market value of the companys equity?

2) Halis current stock price is $36.00, its last dividend was $2.40, and its required rate of return is 12%. If dividends are expected to grow at a constant rate, g, in the future, and if the required rate of return is expected to remain at 12%, what is Halis expected stock price 5 years from now?

a) The constant growth rate =

b) Expected stock price 5 years from now =