Quantitative Problem 1t Assume today is December 31, 2019. Barrington Industries expects that its 2020 after-tax operating income [EBrT (1 - T)] wilt be $400 mithion and its 2020 depreciation expense will be $70 million, Barrington's 2020 gross capital expenditures are expected to be $110 mallion and the change in its net operating working captal for 2020 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 5.5% annually. Assume that its free cash flow occurs at the end of each year. The firm's weighted average cost of capital is a.7\%; the market value of the company's debt is $2.45 bilalon; and the company has 180 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-operating assets, Using the corporate valuation model, what should be the cornpany's stock price today (December 31, 20:9)? Do bot round intermedlate calculations. Round your answer to the nearest cent: s. pershare Quantitative Problem 2: Hadley Inc, forecasts the year-end free cash flows (in mulions) shown below. The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 4% rate after Year 5 , The firm has $26 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 18 million shares outstanding, Also, the firm has zero non-operating assets. What is the value of the stock price today (Year 0)? Round your answer to the nearest cent, Do not round intermediate calculations. s. pershare According to the vatuation models developed in this chapter, the value that an investar assigns to a share of stock is dependent on the length of time the investar plans to hold the stock. The statement above is Conclusions Analysts use both the discounted dividend model and the corporate valuation model when valuing mature, dividend-paying firms; and they generally use the corporate model when voluing divisions and firms thot do not pay dividends. In principle, we should find the same intrinsic value using either model, but differences are often observed