Imagine that you want to use the discounted cash flow valuation method to find the fundamental value of Virtus Plc. You have managed to generate a projection of the free cash flow to the firm (FCFF) for this company for the next six years:

One year from now	Two years from now	Three years from now	Four years from now	Five years from now	Six years from now
14 million	17 million	18 million	20 million	21 million	22 million

Following this prediction period, you anticipate that the cash flow will continue to grow perpetually at a rate of 4% per annum. The weighted average cost of capital (WACC) is 8.4%. Assume that the company will never go bankrupt.

• a.Using the WACC rate, calculate the present value of the free cash flows to the firm over the next six years.
• b.Compute the terminal value of Virtus Plc and discount it back to express it in present value terms.
• c.Calculate the value of the company.
• d.Calculate the fundamental stock value if the market value of debt is 80 million and there are 7 million shares outstanding.