4) (3 pts) Assume that Company D's Free Cash Flow from assets has been estimated to be $80 million in 2020 and $90 million in 2021. The free cash flow is expected to grow at a constant rate of 5% after 2021. a) If the appropriate discount rate for Company D's FCF model is 7.7%, what is the horizon value at the end of 2021 for Company D using the Free Cash Flow Model? 2019 2020 2021 FCF $80 m $90 m Horizon Value b) What is the intrinsic Value today (beginning of 2020 aka end of 2019) of Co.D's Assets? Intrinsic Value = c) If Company D has no meaningful debt then Assets = Equity and the intrinsic Value of the Assets would equal the intrinsic Value of Equity. If the firm has 45 million shares outstanding, what would be the intrinsic value per share of stock today according the estimates given for Company D? Intrinsic Value per share = 2) (4 pts) You estimate that Company X will have earnings per share (EPS) of $4.00 next year (end of 2020) and EPS of $4.80 in 2 years (2021). You also estimate that Company X will sell at a P/E multiple of 23 in two years. The dividend payout ratio is expected to be 40%. a) What is your estimation of the intrinsic value of Company X if your required rate of return is 8.0% 2020 2021 Dividends Selling Price Intrinsic Value today = $_ b) If Co. X is currently trading at $75, would you consider the stock a good buy today? _Yes or No_ More on back