Part $1$

Covan$,$ Inc. is expected to have the following free cash$$ flow: $($see table attached as a picture$).$

a$.$ Covan has $8$ million shares$$ outstanding, $$$$3$ million in excess$$ cash, and it has no debt. If its cost of capital is $12\%,$ what should be its stock$$ price?

Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If you plan to sell Covan at the beginning of year$2,$ what is its expected$$ price?

c$.$ Assume you bought Covan stock at the beginning of year $1.$ What is your expected return from holding Covan stock until year$2?$