1. Erwin Footwear wishes to assess the value of its Active Shoe Division. This division has debt with a market value of $12,500,000 and no preferred stock. Its weighed average cost of capital is 10%. The Active Shoe Divisions estimated free cash flow for each of the next four years appears in the following table. Beyond year four, the firm expects its free cash flow to grow at 4% per year forever.

Year (t) Free Cash Flow (FCF)

1. $ 800,000
2. $1,200,000
3. $1,400,000
4. $1,500,000

1. Use the free cash flow valuation to estimate the value of Erwins entire Active Shoe Division.
2. Use your finding in part (a) along with the date provided to find this divisions common stock value.
3. If Active Shoe Division as a public company with 500,000 shares outstanding, use your finding in part (b) to calculate its value per share.