Abbey Naylor, CFA, has been directed to determine the value of Sundanci's stock using the Free Cash Flow to Equity (FCFE) model. Naylor believes that Sundanci's FCFE will grow at 27% for 2 years and 13% thereafter. Capital expenditures, depreciation, and working capital are all expected to increase proportionately with FCFE.

The FCFE is equal to 24 million and the fcfe per share is $0.286

. b. Calculate the current value of a share of Sundanci stock based on the two-stage FCFE model.

c. i).Describe one limitation of the two-stage DDM model that is addressed by using the two-stage FCFE model. ii). Describe one limitation of the two-stage DDM model that is not addressed by using the two-stage FCFE model

The infomation you will need is in this table

Sundanci actual 2017 and 2018 financial statements for fiscal years ending May 31 (\$ million, except per-share data) Table 18B Selected financial information