Question 3: FCFF Valuation F&G Manufacturing Company is expected to have before-tax cash flow from operations of $750,000 next year. Corporate tax rate is 21%. It is expected that $250,000 of operating cash flow will be invested in new fixed assets, and another $50,000 in additional inventory. Depreciation for the year will be $125,000. After the next year, cash flows are expected to grow at 7% per year for the following 2 years, then stabilize at 3% per year thereafter. The firm has $3,000,000 outstanding debt, and 1 million shares outstanding. F&G stock is currently trading at $4 per share. The interest rate F&G currently pays on its ebts 7%. Current risk-free rate 3%, and market risk premium is 8%. F&G's beta is 1.25. What is the intrinsic value per share of F&G stock? A. $4.15 B. $3.58 C. $5.35 D. $2.17 Giang Nguyen