You were given estimates of free cash flow from the company, presented below, and you have no reason to doubt them. You know that these cash flows will not grow at such a pace indefinitely and you are likely to be conservative on the estimates of the future of any future cash flows. You think that a 2% growth is achievable. Current assets are equal to $10 million, current liabilities are $15 million, long-term debt is equal to $ 6 million, and preferred shares are equal to $2 million.

Cash flows for years 0 to 5

Years	0	1	2	3	4	5
In $ millions	4	5	6	7	8	9

The T-bill offers a 3% rate of return while the S&P market index returned 32% to investors last year. You estimate that the company has an average risk compared to the market (you should know what this implies)

Estimate the market of common equity.

NOTE: NEED TO SHOW THE STEP BY STEP SOLUTION