Union Pacific Rail road reported net income of GH770million after interest expenses of GH320 million in a recent financial year. (The corporate tax rate was 36%.) It reported depreciation of GH960million in that year, and capital spending was GH1.2 billion. The firm also had GH4billion in debt outstanding on the books, was rated AA (carrying a yield to maturity of 8%), and was trading at par (up from GH3.8 billion at the end of the previous year). The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at GH60 per share), with a book value of GH5 billion. Union Pacific paid 40% of its earnings as dividends and working capital requirements are negligible. (The Treasury bill rate is 7%, and risk premium was 5.5%).

Required:

1. Free Cash Flow to the Firm for the most recent financial year. (5 Marks)

2. Value of the firm now. (5 Marks)
3. Value of equity now. (5 Marks)

NB PLEASE SHOW A DETAILED WORKING FOR A THUMBS UP