Angel Enterprise was going public in 2018. You were wondering whether the $30 per share offer price is a fair price. You decided to use discounted cash flow approach to value the company's stock. You gathered the following data:

 

Year	FCF	Other Data
2019	$600,000	Growth rate of FCF beyond 2023 = 3%
2020	$900,000	Weighted Average Cost of Capital (WACC) = 10%
2021	$1,400,000	The firm has no debt
2022 2023	$1,800,000 $2,500,000	Number of common shares outstanding = 1,000,000

 

a. Based on your valuation, what is the common stock per share? Is the stock worth buying?

 

b. What is the common stock per share if the terminal growth rate (growth rate beyond 2023) were 5% instead of 3%?