Projected cash flows for Boyle Clinic are shown below. Boyle has a 40% tax rate and has a target capital structure of 40% debt.It's current Corporate Cost of Capital is 10% and the required return (cost) of its equity capital is 15%.Boyle currently has $150M in outstanding debt.The best available estimate is that Boyle's cash flows will grow by 3% annually after year 4.Estimates are that similar companies have been selling for 1.3x operating revenues.

$000's. Year 1 Year 2 Year 3 Year 4

Revenues600,000630,000670,000700,000

Expenses (not including depreciation)500,000525,000550,000575,000

Depreciation50,00052,00055,00058,000

Earnings before interest and taxes50,00053,00065,00067,000

Interest12,00013,00014,00015,000

Net income before taxes38,00040,00051,00052,000

Taxes at 40%15,00016,00020,00021,000

Net income after taxes23,00024,00031,00031,000

Estimated retentions19,00020,00025,00026,000

a.What is the value of Boyle using theFree Operating Cash Flowmethod?

b.What is the value of Boyle using the market multiple method?(2)