The analyst is analyzing the financial statements of another Yettobe corporation (the state- ments are in million dollars). Its stock is currently traded at $50 and it has 20 million shares outstanding. The firms market value of debt is 120 millions. The shareholders require a return of 15% and before-tax cost of debt is 10%. Assume that the expected long-term growth rates in FCFF, FCFE, dividends, and residual income are 4%. Using the constant growth model to compute the following:

a. [6pts] What is firm value?

b. [2pts] What is the intrinsic equity value per share using FCFF?

c. [5pts] What is the intrinsic equity value per share using FCFE?

d. [3pts] What is the intrinsic equity value per share using DDM?

e. [3pts] What is the intrinsic equity value per share using residual income model?

f. [1pt] Based on our valuations, should the analyst give a buy/hold/sell recommendation for Yettobe stock?

2018 2019 17 23 4 44 18 20 3 41 2019 2,500 2,000 500 250 Income statement Revenue (-) Cost of goods sold Gross profit (-) SG&A (-) Depreciation EBIT (-) Interest expense EBT - Taxes (at 20%) Net Income 50 200 20 180 920 (50) 870 914 1,000 (100) 900 941 36 144 Balance sheet Current assets Cash Accounts receivable Inventory Total current assets Fixed assets Gross property, plant, and equipment Accumulated depreciation Total fixed assets Total assets Current liabilities Accounts payable Short-term debt Total current liabilities Long-term debt Total liabilities Shareholders' equity Commonstock Retained earnings Total equity Total liabilities and owner's equity 64 72 222 286 548 548 8094 628 642 914 941