Questions $4$ and $5$ are related.

Recall the Value of the Firm ${?}_0=FC\frac{F_t}{[1+\text{W}\text{A}\text{C}\text{C}{]}^t}$ with $t$ from $1$ to $.$ The owners of Martial Arts Inc. $[$the

owner$/$operator of a chain of karate dojos$]$ are considering selling their business to a private equity firm. Next

year's end$-$of$-$year free cash flow $(FC{F}_1)$ is expected to be $$1\mathrm{.}25$ million, lower than recent years due to a major

expansion. Free Cash Flow is expected to grow at the rates shown in the table below thereafter. Beginning in

year $7$ a constant growth rate of $4\%$ is forecast. The company's WACC is $6\mathrm{.}50\%.$ What is the estimated intrinsic

value of the firm in millions of dollars? Round to two decimals.

a$.$ $$54\mathrm{.}57$

b$.$ $$67\mathrm{.}44$

c$.$ $$70\mathrm{.}31$

d$.$ $$81\mathrm{.}33$

e$.$ $$87\mathrm{.}55$

Refer to the previous question about Martial Arts Inc. The company has $$27$ million of long$-$term debt plus

preferred stock outstanding and there are $2\mathrm{.}2$ million shares of common stock outstanding. The $$27$ million is the

combined market value of the debt and preferred stock. The firm does not hold excess cash. Some believe, with

some justification, the book value should be used but that is not consistent with the WACC calculation so

theoretically market values should be used. What is the firm's estimated intrinsic value per share of common

stock? Round to one cent.

a$.$ $$17\mathrm{.}57$

b$.$ $$18\mathrm{.}05$

c$.$ $$18\mathrm{.}38$

d$.$ $$20\mathrm{.}63$

e$.$ $$21\mathrm{.}07$