Valco inc is a publicly traded company and you have been provided the following information on its expected revenues and after-tax operating income (in $ millions), each year for the next 5 years:

	Last Year	1	2	3	4	5
Expected Growth Rate		8%	8%	8%	8%	8%
Revenues	$1000	1080	1166.4	1259.71	1360.49	1469.33
EBIT (1-t)	$120	129.6	139.97	151.17	163.26	176.32

The company currently has 150 million shares trading at $10/share (book value of equity=$500 million). The company also had $400 million in debt outstanding (book and market value) and $300 million in cash. The cost of capital for the firm is expected to be 12% for the next 5 years and drop to 8% thereafter.

a. Assume that the firms return on invested capital stays at its current level for the next 5 years, estimate the free cash flow to the firm each year for the next five years.

b. After year 5, you expect the firms return on invested capital to halve (from current levels) and the expected growth rate to drop to 2% a year in perpetuity. Estimate the terminal value at the end of year 5.

c. Estimate the value of equity per share today.