My company has 187 shares outstanding, $26.7 billion in debt and $807m in cash. It projects free cash flows for next 2 years based on earnings forecasts below, a marginal tax rate of 24% capital expenditures increasing from $175m in year 1 to $190m by year and increases in net working capital(NWC) are based on a NWC to sales ratio of 5% year.

Forecasts year 0 Year 1 Year 2

Sales 10,287 13,095 14,117

Growth vs Prior year 27.3% 7.8%

Cost of goods sold (3,274) (3529)

Gross profit 9822 10,588

Other operating expense (262) (282)

SG&A 2619 2823

Depreciation 171 171

EBIT 6770 7311

1.Determine free cash flow each year.

2.Suppose free cash flow is expected to grow at 1% after year 2. if WACC is 16.7%, what is the value of stock?