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