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A firm s stock is currently trading at $ 4 0 per share. Assume that the firm is in a stable growth phase with an

A firms stock is currently trading at $40 per share. Assume that the firm is in a stable growth phase with an expected long-term cashflow growth of 2.5%. Effective tax rate is 25%. The firms debt carries a BBB credit rating. Most recent data available for the firm is as follows
All in $ millions except per share amounts and percentages
EBIT $341
Capex $25
Depreciation expense $50
Change in Accounts Payable - $45
Change in Inventories - $25
Change in Accounts Receivable - $50
Total debt $1000
Cash and cash equivalents $100
Shares outstanding 88
Beta 1.25
Default spread on BBB rated firms 1.5%
Market risk premium 5.5%
Yield to maturity on 30-year Treasury 2.9%
a. What is the firms free cash flow?
b. What is the firms enterprise value and price per share?

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