Assume the following free cash flow projections for Tiger Brands Limited.

Free Cash Flow YEAR0 -50 000

YEAR1 27500 YEAR2 30000 YEAR3 33750 YEAR4 30000

After Year 4, Tiger Brands expects their free cash flow to grow at a rate of 5% per year. The following information is also available to you:

Debt is estimated to be $50,000

Cash is estimated at $20,000

The cost of capital for this investment is 12%

The marginal tax rate is 25%

The expected rate of return is 9%

The weighted average cost of capital is 10%

Shares outstanding is 1,500,000

All calculations should be rounded to 2 decimal places

a) Calculate the value of a Tiger Brands share in Year 0.

b) If Tiger Brands has earnings per share of $2.50 estimate the forward price earnings for Tiger Brands stock.