Q5

u next year while net capital Haintain its existing deb iplhy wants to increase its cash balance by S 20 win dividends next year t to capital ratio, how much can it afford to pay in (2 points) million next yea 5- You have been asked to value an entertainment company byAT&T. The firm' 33.33% tax rate. The firm for the next 3 years for a possible acquisition s current pre-tax operating income is s 150 million, and it has a lowing table summarizes the estimates you have made for the st Term. year (4) Exp. Growth in Operating Income 15% I 5% 1 5% 5% ROC 20% 15% 20% 20% Cost of Capital 11% 10% 12% The firm will be in stable growth after year 3 a. Estimate the expected free cash flows to the firm every year for the next 3 years.Q points) b. b. Estimate the terminal value of the firm, i.e., the value at the end of the third year (2 points) c. Estimate the value per share today.if the firm has $ 800 million in debt outstanding and 100 million shares