Assume that the free cash flow to firm is is expected to grow indefinitely. Using the DCF method, estimate:

1. the value of the firm, 2. the value of equity and the intrinsic value of a share of stock.

Company's financials: Market value of debt Cost of debt Tax rate Adjusted beta Risk-free rate of return Equity risk premium Optimal capital structure: Free cash flow (current year) Projected long-term growth rate in free cash flow Number of shares outstanding 500,000 7% 20% 1.6 4% 5% Debt - 45%, equity - 55% 82,000 4% 22,000