Qui Enterprises forecasts the free cash flows (in millions) shown below (*Year 1 - Year 5.)

The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5% rate after Year 5.

The companys balance sheet shows $10 million of notes payable, $50 million of long-term debt, $25 million of preferred stock, $18 million of retained earnings, and $80 million of total common equity.

Q. a. If the company has 5 million shares of stock outstanding, a. what is the best estimate of its price per share?

Q. b. Based on the answer from (a), if the market price of the stock is observed to be $30 per share, should you buy or sell the stock? Explain.

*FCF Year 1: $10, Year 2 $15, Year 3 $20, Year 4 $25, Year 5 $28