We present 2 examples of the corporate valuation model, In the first problem, we assume that the firm is a imature campany so its free cash fows grow. at a constant rate. In the second problem, we assume that the firm has a parfod of nancohstant groweh Quantitative Problem 1: Assume today is December 31, 2019, Barrington Industries expects that its 2020 after-tak operating income [F8Ir(1 - T)] will be $430 million and its 2020 depreciation expense will be $60 million. Barrington' 2020 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2020 will be $30 million. The firm's free cash flow is expected to grow at a consitant rate of 5.54 annually. Assume that its free cash flow occurs at the end of each vear. The firm's weighted average cost of copital is 8.3%, the market valie of the compary's debt is $3 blilion; and the compary has 180 miltion shares of corrmon stock outstanding. The firm has no preferred stock on its balance shet: should be the company's stock price today (December 31,2019 ) 7 Do not round intermediate calculationa. Round your answer to the nearest cent. $ per share Quantitative problem zt Hadiey Inc forecasts the yearend freo cash fows (in milions) shown below. The welghted avenge cost of copital is 12%, and the FCF are expected to continue growing of a 4 wit rate after Year 5 . The firm has 525 million of market-vatue debt, but it has no preferred stock or any other catstanding ctaims. There are 20 milison shaces outstanding. Also, the firm has tero non4 per share investor pians to hold the stoch. The statement above if We present 2 examples of the corporate valuation model. In the first problem, we assume that the firm is a mature company so its free cash flows grow at a constant rate. In the second problem, we assume that the firm has a period of nonconstant growth. Quantitative Problem 1: Assume today is December 31, 2019. Barrington Industries expects thatits 2020 after-tax operating income [Eam(1 - T)] will be $430 million and its 2020 depreciation expense will be $60 million. Barrington's 2020 gross capital expenditures are expected to be $110 million and the change in its net operating working capital for 2020 will be $30 million. The firm's free cash flow is expected to grow at a constant rate of 5.5% annually. Assume that its free cash flow occurs at the end of each yeac. The firm's weighted average cost of capital is 8.39; the market value of the company's debt is $3 billion; and the company has 180 million shares of common stock outstanding. The firm has no preferred stock on its balance sheet and has no plans to use it for future capital budgeting projects. Also, the firm has zero non-operating assets. Using the corporate valuation model, what should be the companys stock price today (December 31,2019) ? Do not round intermediate calculations. Round your answer to the nearest cent. $ per share Quantitative Problem 2t Hadley inc, forecasts the year-end free cash fiows (in milions) shown below. The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 4% rate after Year 5 . The firm has 525 million of market value debt, but it has no preferted stock or any other outstanding claims. There are 20 million sharet outstanding . Also, the firm fas zaro oons per share Anecet ding to the walint liveloped in this chapter, the value that an investor assigns to a share of stock is dependent on the length of time the investor plans to hold What tale The statement above is Conclusions