11 Heath and Logan Inc. forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. What is the firm's value of operations, in Year 0, in millions?

Year:	1	2	3
Free cash flow:	-$15	$10	$40

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1. Based on the value of operations calculated in #11 please use the following information to calculate the company's intrinsic price per share and answer the questions below:

Accounts Receivable = $8 million

Inventory = $6 million

Short-term Investments (unrelated to operations) = $10 million

Accounts Payable = $9 million

Notes Payable = $12 million

Long-term Debt = $30 million

Preferred Stock = $5 million

Retained Earnings = $18 million

Total Common Equity = $8 million

- Number of shares outstanding = 5 million

(1) What is the calculated intrinsic price per share?

(2) If the current market price of the stock is $55 per share, explain if the company is fairly-, over-, or under-valued.

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