1. For the next year, you expect the company ABC will have the following financial results:

• Net income will be $160 million.
• Depreciation expense will be $34 million
• The value of debt is $500 million, with the (before-tax) interest rate of 6%.
• Capital expenditure will be 20 million
• Net working capital will be increased by $ 5million
• The corporate tax rate is 34%
• The cost of equity is 8% and the target D/E=1 (use this ratio to calculate WACC)
• The company has 100 million shares outstanding.

1. Assume FCFFs grow at 20% until year 6 and at 3% afterwards in perpetuity. Value the companys stock using FCFF approach.
2. Assume FCFEs grow at 20% until year 6 and at 3% afterwards in perpetuity. Value the companys stock using FCFE approach.