Covan Limited is expected to have the following free cash$$ flows:

Year

$1$

$2$

$3$

$4$

FCF

$12$

$14$

$15$

$16$

Grow by $3\%$ per year

a$.$ Covan has $7$ million shares$$ outstanding, $$$$3$ million in excess cash and it has no debt. If its cost of capital is $11\%,$ what should its share price$$ be$?$

b$.$ Covan retains all its FCF and has no plans to add debt. Assume it earns its cost of capital on its excess cash. If you plan to sell Covan at the beginning of year$2,$ what should you expect its price to$$ be$?$

c$.$ Assume you bought Covan shares at the beginning of year $1.$ What is your return expected to be from holding Covan shares until the beginning of year$2?$