Use the following information for problem 1-3. You estimate that a firm's cost of debt is 9%, cost of equity is 16% and corporate tax rate is 30%. The firm has a capital structure of 40% debt and 60% equity.

1. For this firm, assume that free cash flows of the next seven years are estimated to be $10, $18, $26, $34, $40, $46 and $52, respectively. The long term growth rate of free cash flows is estimated to be 4%. What is the enterprise value of this firm? [B]

2. For this firm, assume that free cash flows to equity holders of the next four years are estimated to be $7, $13, $18 and $23, respectively. The long term growth rate of free cash flows to equity holders is estimated to be 4%. What is the equity value of this firm? [C]