1. Discounted Cash Flow Model

At the end of 2018, you forecast the following cash flows (in millions) for Helen of Troy Limited. Helen of Troy has borrowings at the end of 2018 of $600 million and holds investments in debt securities of $100 million. You forecast that free cash flow will grow at 4 percent after 2021 into perpetuity. Use a required return of 9 percent to calculate the firms enterprise value and equity value at the end of 2018. Please show your calculation of the continuing value. Round all calculations to two decimal points.

Calculation of continuing value:

2018 2019 2020 2021 Adjusted cash from used for) operations 3,500 $ 3,750 $ 4,250 Adjusted cash from (used for) investment (2,000) (1,750) (1,500) Free cash flow Discount factor Present value of free cash flows Total present value of FCF through forecast horizon Continuing vale (CV) Present value of CV Enterprise Value Equity Value 2018 2019 2020 2021 Adjusted cash from used for) operations 3,500 $ 3,750 $ 4,250 Adjusted cash from (used for) investment (2,000) (1,750) (1,500) Free cash flow Discount factor Present value of free cash flows Total present value of FCF through forecast horizon Continuing vale (CV) Present value of CV Enterprise Value Equity Value