Answer Question 13 ONLY!!

(96) CHAPTER 8 a. Draw a free cash flows diagram of its dividends. b. What is Tech's intrinsic value? c. If the market value of Tech is $30, should it be purchased? Explain. 12. (Free Cash Flow Model) A firm has forecasted free cash flows as follows: Beyond year 5, its FCFs are expected to grow at 2% per year infinitely. The firm has $300mil in short term investments; $400 million in preferred stock, and $400 million in corporate bonds. There are 10 million shares of common stock outstanding. If the firm has a weighted average cost of capital of 15%, what is the intrinsic value of the common stock? 13. (Free Cash Flow Model) A firm has forecasted free cash flows as follows: Beyond year 5, FCFs are expected remain flat indefinitely. The firm has $500mil in short term investments; $100 million in preferred stock, and $300 million in corporate bonds. There are 20 million shares of common stock outstanding. If the firm has a weighted average cost of capital of 13%, what is the intrinsic value of the common stock? Scanned with CamScanner