Tortured Poet Industries invests a large sum of money in R&D; as a result, it retains

and reinvests all of its earnings. In other words, Tortured Poet does not pay any

dividends, and it has no plans to pay dividends in the near future. A major pension fund

is interested in purchasing Tortured Poet's stock. The pension fund manager has

estimated Tortured Poet's free cash flows for the next $4$ years as follows: $$4$ million, $$8$

million, $$13$ million, and $$22$ million. After the fourth year, free cash flow is projected to

grow at a constant $3\mathrm{.}5\%.$ Tortured Poet's WACC is $9\mathrm{.}5\%,$ the market value of its debt and

preferred stock totals $$95$ million, the firm has $$25$ million in nonoperating assets, and it

has $8\mathrm{.}9$ million shares of common stock outstanding.

a$.$ What is Tortured Poet's horizon value?

b$.$ What is the pension fund's estimated price per share?

$(10$ points$)$