Hydra Corporation (HYD) reported operating income (EBIT) of $600 million for the last year. Depreciation expense totaled $200 million, capital expenditures came to $50 million and net working capital increased by $30 million. Free cash flow is expected to grow at a rate of 12% for the next 4 years and 3% thereafter. HYD faces a 40% tax rate and has $2550 million (market value) in debt outstanding. HYD has a cost of capital of 15%. Use this information to answer the following questions:

(a) Calculate HYDs free cash flow for last year and for this year.

(b) What is HYDs firm value in year 4? (Hint: Following the example in class, to calculate this we the growing perpetuity formula.)

(c) For HYD today, what is the value of the entire firm today?

(d) Assuming HYD has 50 million shares outstanding, what is the current value per share? (Hint: In (c) above you calculate the enterprise value that includes the value of debt and the value of equity.)