Quantitative Problem 1: Assume today is December 31,2019 . Barrington Industries expects that its 2020 after-tax operating income [EBrr( 1 - T)] will be $450 million and its 2020 depreciation expense will be $70 million. Barrington's 2020 gross capital expenditures are expected to be $110 million and the change in its net operating warking capital for 2020 will be $30 milion. The firm's free cash fow is expected to grow at a constant rate of 6.5% annually, Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of copital is 8.8%; the market value of the company's debt is $2 billion; and the company has 170 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-cperating assets. Using the corporate valustion model, what should be the company's stock price today (December 31,2019) ? Do not round intermediate calculations: flound your answer to the nearest cent. $ per share Quantitative Problem 2: Hadley Inc, forecasts the year-end free cash fiows (in millions) shown below. The weighted average cost of capital is 9%, and the FCFs are expected to continue growing at a 3 fate after Year 5 . The firm has 324 million of market-value debt, but it has no prefened stock or any other outstanding claims. There are 20 million shares outstanding. Also, the firm has zero non-operating assets. What is the value of the stock price today (Year D)? flound your answer to the nearest cent, Do not round intermediate calculations. 5 per share Mccording to the valuation models develeped in this chapter, the value that an invewor assigns to a share of stock is dependent on the length of time the investor plans to hold the stock. The statement above is Cenciusions Analysts use both the discoumed dividend model and the corperate valuation model when valuing mature, dividend-paving firms; and they generally ise the corporate model when valuing divisions and firms that de not pay dividends. In principle, we should find the same intrinsic yalue using either model, but differences are often observed. Even if a company is paying steady dividends, much can be iearned feam the corporate medel; so analysts today use it for all types of valuations. The process of projecting fiture financial statements can reveal a great deal about a company's cperations and financing needs. Also, such an analysis can provide insights into actions that might be taken to increase the company's value; and for this reason, it is integral to the planning and forecasting process