Valuing free cash flow Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made in 2016 are as follows. ($ millions) 2017 2018 2019 2020 2021 1.0 4.0 Net income Investment Free cash flow 2.0 1.0 3.2 1.2 1.0 3.7 1.4 2.3 1.4 2.6 0 1.0 2.0 Phoenix's recovery will be complete by 2021, and there will be no further growth in free cash flow. a. Calculate the PV of free cash flow, assuming a cost of equity of 9%. b. Assume that Phoenix has 12 million shares outstanding. What is the price per share? c. If the 2016 net income is $1 million, what is Phoenix's P/E ratio? How do you expect that P/E ratio to change from 2017 to 2021