A) Firm B has 2 billion shares trading at $50. It has $1bn debt, $6bn in cash and its assets will

generate a $10b free cash flow next year. Given a 12% WACC, at what annual rate would cash

flows need to be forecast to grow in perpetuity to justify the observed stock price?

B) Firm M has 1 million shares, 7m in longterm debt with 6% interest, 3m in shortterm debt

with a 3% interest, 4m in accounts payable, 4m in cash, and 2m in cash equivalents. Its WACC

is 9.65% and its free cash flow forecast is as follows (in thousands of USD). Estimate its

enterprise value and value per share assuming a 2% perpetual growth rate?