P

ascal

Corporation is a

supplier of

a

utomotive

products.

F

ollowing free cash flows (FCFs)

a

re forecasted for

the next 3 years

.

FCF is expected to grow at a constant

9

% rate

after 3

years

.

P

ascal

s WACC

is 1

4

%.

You are

the CFO of a

big

automotive company. Due to

the

economies of scale, you

r company

plan

s

to acquire Pascal Corporation.

Y

our task is to

calculate the followings as the CFO of the company, which plans to acquire Pascal.

(20 pts)

1. year

-

$

6

0

2. year

$

7

0

3. year

$

8

0

a.

What is

P

ascal

s horizon, or continuing, value?

(6 pts)

b.

What is the firms value today?

(6 pts)

c.

Sup

pose

P

ascal

has $1

6

0 million of debt and 10 million shares of stock outstanding. What

is your estimate of current price per share?

(8 pts