Suppose that you are an analyst and want to estimate the value of firm XYZ Inc using a 2-stage DCF. For the high growth period (which you assume to be 5 years) your estimates of after-tax operating income and free cash flows are the following (in millions): Year EBIT (1-T) FCFF 0 100 25 1 105 26 2 110 28 3 116 29 4 Assume that all your colleague's estimates are correct. 122 30 3. (1 point) Estimate the value of the firm at t=0 (i.e. today). 4. (1 point) What is the price per share implied by your estimation? 5 Your expect the company to maintain the same ROC for the next 5 years (i.e. during the high growth period). Afterwards, you expect a 2% growth rate forever. 128 In addition, you estimate the firm's cost of capital of the company to be 8% during the high growth rate phase and 6% in the steady state (i.e. constant growth period). During the steady state you estimate the ROC to be 4%. 1. (1.5 points) Compute the ROC of the company during the high growth rate stage? 2. (1.5 point) Estimate the TV at t=5. 32 Finally XYZ Inc has $60m in cash, $150m of debt outstanding and 50m of common shares outstanding.