A major pension fund is interested in purchasing Teds stock. The pension fund manager has estimated Teds free cash flows for the next 4 years as follows: $3 million, $6 million, $10 million, and $15 million. After the 4^th year, free cash flow is projected to grow at a constant 7%.

Teds WACC (discount rate) is 12%, the market value of its debt and preferred stock totals $60 million, and it has 10 million shares of common stock outstanding.

What is Teds enterprise value today? (4 marks)

What is an estimate of Teds price per share? (2 marks)