Please see the attached document answer the questions at the end, show all work.

John Jones, CFA, is head of research department of Peninsular Research. One of the companies he is reseaching, Mackinac Inc., is a U.S.based manufacturing company. Mackinac has released the June 2016 financial statements shown in Exhibits 4-21, 4-22, and 4-23 EXHIBIT 4-21 Mackinac Inc. Annual Income Statement 30 June 2016 (in thousands) 2016 $250,000 125,000 125,000 50,000 75,000 10,500 64,500 11,000 53,500 16,050 $37,450 13,000 2.88 Sales Cost of goods sold Gross operating profit Selling, general, and administrative expenses EBITDA Depreciation and amorization EBIT Interest expense Pretax income Income taxes Net income Shares outstanding EPS EXHIBIT 4-22 Mackinac Inc. Balance Sheet 30 June 2016 (in thousands) Current Assets Cash and equivalents Receivables Inventories Other current assets Total current assets Noncurrent Assets Property, plant, and equipment Less: Accumulated depreciation Net property, plant, and equipment Investments Other noncurrent assets Total noncurrent assets Total assets Current Liabilities Accounts payable Short-term debt Other current liabilities Total current liabilities Noncurrent Liabilities Long-term debt Total noncurrent liabilities Total liabilities Shoreholders' Equity Common equity Retained earnings Total equity Total iabilities and equity 2015 2016 $11,020 35,000 21,000 23,000 $90,020 $20,000 40,000 29,000 23,000 $112,000 $130,000 32,500 97,500 70,000 36,000 203,500 $293,520 $145,000 43,000 102,000 70,000 36,000 208,000 $320,000 $35,000 8,000 15,500 $58,500 $41,000 12,000 17,000 $70,000 100,000 100,000 158,500 100,000 100,000 170,000 40,000 95,020 135,020 $293,520 40,000 110,000 150,000 $320,000 EXHIBIT 4-23 Mackinac Inc. Cash Flow Statement 30 June 2016 (in thousands) 2016 Cash Flow from Operating Activities Net income Depreciation and amorization $37,450 10,500 Change in Working Capital (Increase) decrease in receivables (Increase) decrease in inventories Incerase (decrease) in payables Incerase (decrease) in other current liabilities Net change in working capital Net cash from operating activities ($5,000) (8,000) 6,000 1,500 (5,500) $42,450 Cash Flow from Investing Activities Purchase of property, plant, and equipment Net cash from investing activities Cash Flow from Financing Activities Change in debt outstanding Payment of cash dividends Net cash from financing activities Net change in cash and cash equivalents Cash at beginning of period Cash at end of period ($15,000) ($15,000) $4,000 (22,470) (18,470) $8,980 11,020 $20,000 Mackinac has announced that it has finalized an agreement to handle North American production of a successful product currently marketed by a company headquartered outside North America. Jones decides to value Mackinac by using the DDM ad FCFE models. After reviewing Mackinac's financial statements and forecasts related to the new production agreements, Jones concludes the following: Mackinac's earnings and FCFE are expected to grow 17 precent a year over the next five years before stabilizing at an annual growth rate of 9 precent. Mackinac will maintain the current payout ratio. Mackinac's beta is 1.25 The government bond yield is 6 precent, and the market equity risk premiun is 5 precent. A. Calculate the value of a share of Mackinac's common stock by using the two-stage DDM. B. Calculate the value of a share of Mackinac's common stock by using the two-stage FCFE model