McCaffreys Inc. has never paid a dividend, and when the firm might begin paying dividends is not known. Its current free cash flow (FCF) is $100,000, and this FCF is expected to grow at a constant 7% rate. The weighted average cost of capital (WACC) is 11%. McCaffreys currently holds $325,000 of non-operating marketable securities. Its long-term debt is $1,000,000, but it has never issued preferred stock. McCaffreys has 50,000 shares of stock outstanding.

Calculate the following:

McCaffreys value of operations

The companys total value

The estimated value of common equity

The estimated per-share stock price

3a. Calculate McCaffrey's value of operations.
		Vop =	FCF(1+g)		=			=	$
			WACC - g
3b. Calculate the company's total value.
		Total Value =	Value of Operations		+	Value of nonoperating assets
		=	$		+	$		=	$
3c. Calculate the estimated value of common equity.
		Value of equity =	Total value		-	Value of debt
		=	$		-	$		=	$
3d. Calculate the estimated per-share stock price.
		Price per share =	Value of Equity			Number of Shares
		=	$			$		=	$