Steve Caisson is analyzing WobblyPile, a U.S. pile-driving company using a 3- stage growth model. He has accumulated the following information.


Current FCFF = $400 Million

Outstanding shares = 150 Million

Beta of WobblyPile = 1.25

Risk-free rate = 2.5%

Market risk premium = 7.0%

Cost of debt before tax = 7.5%

Company Tax rate = 30%

Capital Structure on the balance sheet = 30 % debt; 70% equity

Book Value of long-term debt = $1000 Million. It is assumed that this equates to the Market Value of the debt.

Growth rate of FCFF =

• Stage 1, years 1-4 .... 10% annually

• Stage 2: 7.5% in year 5, 6.0% in Year 6, 4.5% in Year 7

• Stage 3: 3% in year 8 and thereafter

Questions: Using the information that Steve has accumulated, answer the following questions:

4. The total Value of the Firm is closest to?

5. The Market Value of Equity per share is closest to?

6. On the assumption that your price modeled in "5" is reflected in actual market pricing, the Price to Book Value is closest to?