Golden Eye Co., a hi-tech satellite company, is considering a possible cross-listing in the U.S. The projected financials of the company are listed in Exhibit 1. The free cash flow in year 2019 is estimated to be $180 million and is expected to grow at 2% after that. The tax rate for similar firms is 33%. The comparable firms have an average beta of 2.3 and an average D/Firm value ratio of 25%. Golden Eye Co. has just borrowed $1 billion of long-term debt at 9% interest rate and intends to maintain a constant debt-to-equity ratio in the future. Its interest payments are given in Exhibit 1; the expected interest payment in 2019 is $85 and will grow at the same rate as the FCF. The risk-free rate is 5.8% and the market risk premium is 5.5%. (6 pts.)

1. Estimate the free cash flows of Golden Eye Co.
2. Estimate the enterprise value and the market value of equity of Golden Eye Co.

Exhibit 1. $ millions 2017 2016 2018 Revenues $6,619 $7,417 $8,564 EBIT*(1-t) 340.00 380.00 400.00 Depreciation 50 55 60 Change in NWC $70 $75 $80 Capital Expenditures 150 200 220 Interest payments 90 75 80