1. Z&S Inc. anticipates free cash flows of $320,000 per year for the next four years. Beyond that time, free cash flows are expected to grow at a constant rate of 5 percent per year. If the firms average cost of capital is 15 percent, the market value of the firms debt is $426,000, and Z&S Inc. has a quarter of a million share of stock outstanding, what is the value of the companys stock?

1. $9.63
2. $11.34
3. $1.95
4. $8.90