7) Hectoritis Corporation currently has free cash flow (FCF) of $12 million. A well- respected stock analyst estimates that this FCF will increase by 11 % for the next 5 years. The analyst estimates that at the end of 5 years the companys terminal value will be based on the year 5 FCF and the long term FCF growth rate of 6%.

Suppose Hectoritis Corporation has a beta of 1.3, the risk-free rate is 4%, and the market risk premium is 11%. The company has no debt and $10 million in excess cash on its balance sheet. Hectoritis Corporation has 9 million shares outstanding.

A) Calculate the FCFs for years 1 5.

B) Calculate the terminal value for the slower growth period assuming all cash flows occur at year end.

C) Calculate the Enterprise value of Hectoritis Corporation assuming all cash flows occur at year end.

D) Calculate an Equity value and per share value for Hectoritis Corporation assuming all cash flows occur at year end.

E) Show how the per share value changes if you assume mid-year cash flows? Provide the detailed calculations on the excel sheet.

F) Suppose Hectoritis Corporation had $80 million in debt and its WACC was 13%. Calculate the new per share value of Hectoritis Corporation . Refer to the steps in 2-4 for guidance. Provide detailed calculations on the excel sheet.