Question 5. Question 5. The following information pertains to Augustina Co. Ltd. Revenues, which are forecasted to be $500 million in one year, are expected to grow at 10 percent per year for the two years after that, 8 percent per year for the next two years, and 6 percent per year after that. Expenses including depreciation are 60 percent of revenues. Net investment, including net working capital and capital spending less depreciation, is 10 percent of revenues. Because all costs are proportional to revenues, net cash flow (sometimes referred to as free cash flow) grows at the same rate as do revenues. GHCS is an all-equity firm with 12 million shares outstanding. A discount rate of 16 percent is appropriate for such a firm. Assume tax rate as 40%. Compute for the Price per share of Augustina Co. Ltd Question 6 Question 6 Union Pacific Rail road reported net income of $770million after interest expenses of $320 million in a recent financial year. The corporate tax rate was 36%. It reported depreciation of $960 million in that year. and capital spending of $1.2billion. The firm also had $4billion in debt outstanding on the books, was rated AA (carrying a yield to maturity of 8%), and was trading at par (up from $3.8 billion at the end of the previous year). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. Union Pacific paid 40% of its earnings as dividends and working capital requirements are negligible. (The Treasury bond rate is 7%.). You can assume a market risk premium of 5.5%. You are required to a. Estimate the Free Cash Flow to the Firm (FCFF), for the most recent financial year. b. Estimate the value of the firm now. c. Estimate the value of equity and the value per share now