Derham Inc. has an expected net operating profit after taxes, EBIT (1-T), of $12,700 million in the coming year. In addition, the firm is expected to have net capital expenditures of $1,905 million, and net operating working capital (NOWC) is expected to increase by $10 million. How much free cash flow (FCF) is Dernham Inc. expected to generate over the next year?

a.$10,805 million b.$171,671 million c.$10,785 million d.$14,595 million

Dernham Inc.'s FCF are expected to grow at a constant rate of 5.43% per year in the future. The market value of Dernham Inc.'s outstanding debt is $45,442 million, and preferred stock's value is $25,246 million. Dernham Inc. has 150 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 16.02%

Using the preceding information and the FCF you calculated in the previous question, calculate the appropriate values in this table:

Term Value (Millions)

Total firm Value a.$201,966.29 b.$67,322.10 c.$100,983.15 d.$283,662.45

Value of Common equity a.$75,737.15 b.$55,541.15 c.$30,295.15 d.$55,391.15

Intrinsic value per share a.$201.97 b.$370.27 c.$504.91 d.$369.27