Barrett Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Barretts stock. The pension fund manager has estimated Barretts free cash flows for the next 4 years as follows: $3.5 million, $6 million, $12 million, and $15 million. After the fourth year, free cash flow is projected to grow at a constant 7%.

Barretts WACC is 12%, its debt and preferred stock total $66 million, and it has 12 million shares of common stock outstanding.

a. What is the present value of the free cash flows projected during the next 4 years?

b. What is the firms terminal value?

c. What is the firms total value today?

d. What is an estimate of Barretts price per share?