Kelvinhaugh PLC is a retail firm operating at the west end of Glasgow. The expected

free cash flows to the firm in years $1-3$ are given in the table below. The CFO

expects that the free cash flows will grow at a constant rate of $2\%$ from year $4$

onwards. The firm has $200$ million shares outstanding, and its equity represents $60\%$

of its total value. Kelvinhaugh's equity beta is $1\mathrm{.}2.$ Furthermore, the firm's cost of

debt is $6\%.$ The risk$-$free rate is $5\%,$ and the market return is expected to be $10\%.$

The corporate tax rate is $35\%.$

$1\mathrm{.}1.$ Given the information above, what should be the total firm value and the

share price of Kelvinhaugh PLC$?$

$1\mathrm{.}2.$ Critically discuss the different valuation approaches used by analysts when

valuing stocks.