You are analyzing Facebook and want to determine their stocks intrinsic value per share. You know that their 2018 Free Cash Flows are $2.3 billion. They are implementing some new software and expect their FCF to grow at 10% next year, 5% the following year, and then at 3% indefinitely. You calculate their WACC (required return) at 10.5%. Facebook has $31 billion in non-operating assets (ST investments), they have $6 billion in debt and no preferred stock. They currently have 2.85 billion shares of stock outstanding.

a. Calculate the FCFs for next year and the following year.

b. Calculate the Horizon Value for Facebook (value at the end of year 2).

c. Find the PV of the future FCFs and horizon value to determine the value of Facebooks operations.

d. Determine the intrinsic value per share of Facebooks stock