Data for Mercy Inc is as follows

FCF= $10,000,000

WACC= 10%

FCF is expected to grow at a constant rate of gL =5%

ST Investments= $20,000,000

Debt= $40,000,000

Preferred Stock= $100,000

Mercy Inc has the following projected free cash flows

Year 1 FCF= $1,000,000

Year 2 FCF= $5,000,000

Year 3 FCF= $10,000,000

FCF grows at a constant rate of 5% after year 3.

Question 1

(a) Assuming the WACC, ST Investment,Debt,and number of shares from the above data.Calculate the expected Horizon Value of Operations at Year 3,?

(b) What is the Value of Operations for Mercy Inc. based on the FCF projections from the data above.?

(c) What is the Intrinsic Value of Equity to Common Stockholders, and the Intrinsic Price Per Share for Mercy Inc, based on the two sets of above data.