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Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value. It is thus important to understand

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Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value. It is thus important to understand the impact of distributions-both in the form of dividends or stock repurchases-on the firm's value. Consider the following situation: Elle is a financial analyst in RTE Telecom Inc. As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following calculations and observations: The company generated a free cash flow (FCF) of $132 million in its most recent fiscal year. The firm's cost of capital (WACC) is 12%. The firm has been growing at 5% for the past six years but is expected to grow at a constant rate of 4% in the future. The firm has 33.00 million shares outstanding. The company has $352 million in debt and $220 million in preferred stock. Along with the rest of the finance team, Elle has been part of board meetings and knows that the company is planning to distribute $60 million, which is invested in short-term investments, to its shareholders by buying back stock from its shareholders. Elle also observed that at this point, apart from the $60 million in short-term investments, the firm has no other nonoperating assets. Using results from Elle's calculations and observations, solve for the values in the following tables. Select the best answer provided in the selection list

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