Calculate the valuation of ABC industries using a free cash flow model, given the information below. Calculate the valuation of ABC industries using a free cash flow model, given the information below.

Comment on whether you should invest in the shares and why

ABC Industries $($amounts are in millions$)$

Shares

Growth next $2$ years $10\mathrm{.}00\%$

Growth year $3$ and beyond $3\mathrm{.}00\%$

Beta ABC

Risk Free Rate

Market Risk Premium

Price Bonds

Face Bonds

Maturity Bonds $($years$)$

Coupon

Tax rate

Share Price

Interest Paid on Bonds

Comment on whether you should invest in the shares and why

ABC Industries $($amounts are in millions$)$ WACC Amount Weight Comp Cost WACC

MV Equity $$500$ Debt $$200\mathrm{.}0028\mathrm{.}57\%$

MV debt $$200$ Equity $$500\mathrm{.}0071\mathrm{.}43\%$

Shares $5\mathrm{.}00$ Total $$700\mathrm{.}00$

Cash $$50$

Free cash Flow $(0)$ $$55$

Growth next $2$ years $10\mathrm{.}00\%$

Growth year $3$ and beyond $3\mathrm{.}00\%$ Horizon

Beta ABC $1\mathrm{.}30$ FCF

Risk Free Rate $3\mathrm{.}50\%0123$

Market Risk Premium $7\mathrm{.}00\%$

Price Bonds $$1,050\mathrm{.}00$ PV Cash Flows

Face Bonds $$1,000\mathrm{.}00$ PV Horizon

Maturity Bonds $($years$)10\mathrm{.}00$ EV

Coupon $6\mathrm{.}00\%$ Cash

Tax rate $25\%$ Debt

Share Price $$100\mathrm{.}00$ Equity

Interest Paid on Bonds Annual Stock