Your employer, a mid-sized human resources management company, is considering expansion into related fields, including the acquisition of Temp Force Company, an employment agency that supplies word processor operators and computer programmers to businesses with temporary heavy workloads. Your employer is also considering the purchase of a Biggerstaff & McDonald (B&M), a privately held company owned by two friends, each with 5 million shares of stock. B&M currently has free cash flow of $24 million, which is expected to grow at a constant rate of 5%. B&Ms financial statements report marketable securities of $100 million, debt of $200 million, and preferred stock of $50 million. B&Ms weighted average cost of capital (WACC) is 11%. Answer the following questions.

1. what is the estimated value of operations?

2. What is the estimated total corporate value (this is the entity value)?

3. What is the estimated intrinsic value of equity?

4. What is the estimated intrinsic stock price per share?

Here are my proposed solutions so far:

1. Vop = FCF₁/ (WACC - g_L)

= $24 million (1+ 0.05) / (0.11-0.05) = $420 million

2. Total intrinsic value = value of operations + short-term investments

= $420 million + $100 million = $520 million

3. Intrinsic value of equity = total intrinsic value all debt preferred stock...I stopped because I was unsure if my initial calculation was correct.