Problem $1$

The analyst is analyzing the financial statements of another Yettobe corporation $($the statements are in million dollars$).$ Its stock is currently traded at $$50$ and it has $20$ million shares outstanding. The firm's market value of debt is $120$ millions. The shareholders require a return of $15\%$ and before$-$tax cost of debt is $10\%.$ Assume that the expected long$-$term growth rates in FCFF$,$ FCFE, dividends, and residual income are $4\%.$ Using the constant growth model to compute the following:

$\backslash$table$[[$Balance sheet,$2021,2022,$Income statement,$2022],[$Current assets,,,Revenue,$2,500],[$Cash$,17,18,(-)$ Cost of goods sold,$2,000],[$Accounts receivable,$23,20,$Gross profit,$500],[$Inventory$,4,3,(-)$ SG&A$,250],[$Total current assets,$44,41,(-)$ Depreciation,$50],[$Fixed assets,,,EBIT,$200],[$Gross property, plant, and equipment,$920,1,000,(-)$ Interest expense,$20],[$Accumulated depreciation,$(50),(100),$EBT,$180],[$Total fixed assets,$870,900,(-)$ Taxes $($at $20\%),36],[$Total assets,$914,941,$Net Income,$144],[$Current liabilities$],[$Accounts payable,$14,12,,],[$Short$-$term debt,$50,60,,],[$Total current liabilities,$64,72,,],[$Long$-$term debt,$222,227,,],[$Total liabilities,$286,299,,],[$Shareholders$\text{'}$ equity$],[$Commonstock$,548,548,,],[$Retained earnings,$80,94,,],[$Total equity,$628,642,,],[$Total liabilities and owner's equity,$914,941,,]]$

a$.[6$pts$]$ What is firm's intrinsic value?

b$.[2$pts$]$ What is the intrinsic equity value per share using FCFF$?$

$1$

c$.[5$pts$]$ What is the intrinsic equity value per share using FCFE?

d$.[3$pts$]$ What is the intrinsic equity value per share using DDM$?$

e$.[3$pts$]$ What is the intrinsic equity value per share using residual income model?

f$.[1$pt$]$ Based on our valuations, should the analyst give a buy$/$hold$/$sell recommendation for Yettobe stock?