You prepared the following projection for a proposed leveraged recapitalization of Safe Co. You are going to value the firm using the Capital Cash Flow model.

	NOPAT	Incr.(Decr.) in Invested Capital	Interest Expense
Year 1	324	(54)	400
Year 2	350	(58)	380
Year 3	378	(63)	300
Year 4	408	(68)	200
Year 5	441	(73)	150

The finite forecast period is 5 years.

Other Data:

Cost of equity (unlevered)	10.70%
Cost of equity (levered)	12.50%
Pretax cost of debt	8.0%
Target equity/value	60%
Target debt/value	40%
Tax rate	40%
Debt value, end of year 0	$2,000

a) What is capital cash flow for year 1?

b) To compute a terminal value, you forecast cash flows for year 6. You estimate FCF as 439 and interest expense as 100. You assume that the capital cash flow of year 6 will grow at a 3% rate per year thereafter. What is the undiscounted terminal value?

c) What is the relevant discount rate?

d) What is the current value of Safe Co's equity?