Tight Rope Manufacturing firm earned a net profit margin of 10% on revenues of $5 million this year. Fixed capital investment was $1 million, there was a long term sale of $0.5mn for which you received cash, and depreciation was $2 million. Working capital investment equals 15% of increment sales every year. Net income, fixed capital investment, depreciation, interest expense, and sales are expected to grow at 15% per year for the next six years. After six years, the growth in sales, net income, fixed capital investment, depreciation, and interest expense will decline to a stable 7% per year. The tax rate is 40%, and Tight Rope has 2 million shares of common stock outstanding and long-term debt paying 7.5% interest trading at its par value of $12 million. WACC is 13% during the high-growth stage and 9% during the stable stage.
(a) Calculate the value of the firm using FCFF model?
(b) Calculate its equity and price per share.?