A stock market analyst is evaluating the common stock of Hiers Family Corporation. (HFC). She estimates that the companys operating income (EBIT) for the next year will be $640 million. Furthermore, she predicts that next year HFC will require $160 million in capital expenditures and depreciation expense will be $32 million, so net capital expenditures for next year will be $128 million. Changes in net operating working capital (NOWC) for next year are expected to be $12 million. Free cash flow is expected to grow at a constant annual rate of 4% a year and the companys WACC is 8%. The company has $190 million of debt (market value equals book value), $85 million of preferred stock (market value equals book value), and it has 125 million shares of common stock. The firms tax rate is 25%.

1. What is the estimated value of free cash flow the first year? (That is, what is FCF₁?)
2. Using the free cash flow valuation method, what is its expected stock price today?