ETA is an all$-$equity firm with $50$ million shares outstanding.You are a biomedical student in your final year of university, partnered with a fellow student on a promising

project. Together, you've been developing a diagnostic tool designed to quickly and accurately detect early$-$stage

Alzheimer's disease. After achieving encouraging preliminary results in your lab tests, you're eager to move

towards commercialisation.

To facilitate this, you decide to establish a company, with ownership divided equally between you and your

university partner. The initial setup of the company, including share distribution and investments, is outlined in the

table below:

Your innovative project soon catches the attention of a venture capital fund that specialises in healthcare

innovations. Impressed by your diagnostic tool's potential, the fund offers to invest $$300,000$ in exchange for a

$25\%$ ownership stake in the company. After discussing with your university partner, you both agree to the deal and

issue new shares to the venture capital fund.

$($a$)$ The post$-$money valuation of the company $($after the venture capital fund's investment$)$ is $

Note: Please provide your answer as an

It has $$200$ million in cash and expects future free cash flows of $$80$ million per year $($with the next cash flow

occurring in exactly one year's time$).$ The Board of ETA can either use all excess cash to repurchase shares or for

expansion.

Suppose that ETA is able to invest the $$200$ million excess cash into a project that will increase the future free

cash flows by $30\%$ in year $1($and cash flows stay constant at that level after year $1).$ This investment will not

alter the risk of the business.

ETA's cost of capital is $10\%$ and assume that capital markets are perfect.

If you were advising the board, what course of action would you recommend? Should ETA use the $$200$ million to

expand or repurchase shares?

Required:

$($a$)$ Firm value with expansion is $

million.

Note: Please provide your answer as an integer in million in the format of $($for example, if the answer is

$$1,234\mathrm{.}5$ million, type in $1235).$

$($b$)$ If the board decides to pursue the expansion, the stock price is $

Note: Please provide your answer with two decimal points in the format of $.($for example, if the answer is

$$12\mathrm{.}345,$ type in $12\mathrm{.}35).$

$($c$)$ If the board decides to use the excess cash for repurchase, the stock price is $

$.$

Note: Please provide your answer with two decimal points in the format of $.($for example, if the answer is

$$12\mathrm{.}345,$ type in $12\mathrm{.}35).$ETA is an all$-$equity firm with $50$ million shares outstanding.

It has $$200$ million in cash and expects future free cash flows of $$80$ million per year $($with the next cash flow

occurring in exactly one year's time$).$ The Board of ETA can either use all excess cash to repurchase shares or for

expansion.

Suppose that ETA is able to invest the $$200$ million excess cash into a project that will increase the future free

cash flows by $30\%$ in year $1($and cash flows stay constant at that level after year $1).$ This investment will not

alter the risk of the business.

ETA's cost of capital is $10\%$ and assume that capital markets are perfect.

If you were advising the board, what course of action would you recommend? Should ETA use the $$200$ million to

expand or repurchase shares?

Required:

$($a$)$ Firm value with expansion is $

million.

Note: Please provide your answer as an integer in million in the format of $$

$($b$)$ If the board decides to pursue the expansion, the stock price is $

Note: Please provide your answer with two decimal points in the format of $.$

$($c$)$ If the board decides to use the excess cash for repurchase, the stock price is $

$.$

Note: Please provide your answer with two decimal points in the format of $.$