You have been assigned the task of using the corporate, or free cash flow, model to estimate Petry Corporation's intrinsic value. The firm's WACC is 8.00%, its end-of-year free cash flow (FCF₁) is expected to be $130.0 million, the FCFs are expected to grow at a constant rate of 5.00% a year in the future, the company has $200 million of long-term debt and preferred stock, and it has 35 million shares of common stock outstanding. Assume the firm has zero non-operating assets. What is the firm's estimated intrinsic value per share of common stock? Do not round intermediate calculations.

a. $124.29

b. $128.00

c. $118.10

d. $129.52

e. $123.81

Koy Corporation's 5-year bonds yield 7.60%, and 5-year T-bonds yield 5.05%. The real risk-free rate is r* = 2.70%, the inflation premium for 5-year bonds is IP = 1.95%, the liquidity premium for Koy's bonds is LP = 0.75% versus zero for T-bonds, and the maturity risk premium for all bonds is found with the formula MRP = (t - 1) 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Koy's bonds?

a. 1.80%

b. 1.40%

c. 3.30%

d. 2.55%

e. 2.15%