Beth Hopkins is evaluating Pepsico Inc. (PEP) by using the FCFF and FCFE valuation approaches. She has collected the following information:

PEP has net income of $7.775 billion, depreciation of $2.257 billion, capital expenditures of $4.23 billion, and an increase in working capital of $392 million.

PEP will finance 20 percent of the increase in net fixed assets (capital expenditures less depreciation) and 20 percent of the increase in working capital with debt financing.

Interest expenses are $935 million. The current market value of PEPs outstanding debt is $44.574 billion.

FCFF is expected to grow at 4.0 percent indefinitely, and FCFE is expected to grow at 6.0 percent.

The tax rate is 20.47 percent.

PEP is financed with 19 percent debt and 81 percent equity. The before-tax cost of debt is 3.9 percent, and the before-tax cost of equity is 7.7 percent.

PEP has 1.382 billion outstanding shares.

A. Using the FCFF valuation approach, estimate the total value of the firm, the total market value of equity, and the per-share value of equity. (7 points)

B. Using the FCFE valuation approach, estimate the total market value of equity and the per-share value of equity. (5 points)