You are trying to evaluate the company SportsAI using the discounted cash

flow valuation model. The marginal corporate tax rate of SportsAI is $30\%$ and

you are now at the beginning of the year $2024.$ Please answer the following

questions in the answer book.

a$)$ SportsAI has a C$+$ credit rating, and the average credit spread for debt

with the same maturity and C$+$ rating is $3\mathrm{.}5\%.$ The risk$-$free rate for all

the maturity is $3\mathrm{.}0\%.$ The Bloomberg adjusted beta for SportsAI at the

end of the last year was $2\mathrm{.}16.$ The expected return of the market

portfolio is $8\mathrm{.}50\%.$ The current debt$-$to$-$equity ratio at the end of the

last year was $0\mathrm{.}5$ and then changed to $1\mathrm{.}5$ at the beginning of this year.

We assume that the changes in capital structure does not affect the

firm$$s credit rating nor business risk. Please base on the above

information and calculate the cost of debt $($Kd$),$ cost of equity $($Ke$)$ and

the weighted$-$average cost of capital $($WACC$)$ of the firm after the

changes of capital structure.b$)$ In $2023,$ SportsAI reported an operating income before interest and

taxes $($EBIT$)$ of $$1000$ million. The company paid $$200$ million in taxes

for the year. It also recorded a depreciation and amortization expense

of $$80$ million. In $2023,$ capital expenditures were $$150$ million. Working

capital at the close of $2022$ was $$115$ million, which increased to $$155$

million by the end of $2023.$ Calculate the firm's free cash flow for the

year $2023.$c$)$ The free cash flow to the firm of SportsAI is expected to grow at $10\%$

every year for the next $3$ years $(2024-2026)$ and then it is expected to

grow at $4\%$ beyond the third year. Using the WACC after the change of

capital structure and assuming it will not change in the future, please

use the $$Perpetuity Growth Method$$ and estimate the firm$$s enterprise

value at the beginning of the year $2024($now$).$d$)$ From SportsAI$$s financial statements, we know that it currently has

$$3,500$ million total debt outstanding and $$1,000$ million cash & cash

equivalent. Besides, the firm also has preferred stocks and

noncontrolling interest, worth $$450$ million and $$400$ million

respectively. Based on all the information provided above in this

question, calculate the implied total equity value of SportsAI$$s common

shares.