Your task is to value Rowdy Entertainment Inc., a producer of television shows. You have estimated its earnings per share and its free cash flows to equity per share for the next 4 years:

Year	1	2	3	4
EPS	2.5	3.2	3.5	3.9
FCFE/share	-3.5	-2.8	0.4	1.2

After year 4, earnings per share are expected to increase by 6% a year and net capital expenditures are expected to decrease by 40% a year.

The company currently has no debt or working capital needs. The current beta is 1.6, but you expect the beta to drop to 0.9 after year 4. You expect the company to stay debt-free.

The market risk premium is 5% and the Treasury bond rate is 3%.

Part 1

What is the terminal value of equity per share?

Part 2

What is the current value per share?