1. GrowthEasy generated free cash flow of $2.5 today, and is expected to grow this FCFE at a rate of 18% over the next 4 years. After this period FCFE is expected to grow at a constant growth rate of 6%. If the required rate of return is 14% what should be the stock price of GrowthEasy?
$50.3 $48.93 $64.22 $48.24
2. The Sahali Corporation has EBIT of $3300000 million. Sahali paid $200,000 in interest and has a tax rate of 38%. During the year Sahali invested 25% of pre-tax earnings in the new equipment and additional 8% into working capital to fund its growth. It financed these investments in part by raising $300,000 (net) of new debt. The depreciation is $250,000. What is the free cash flow to equity holders of Sahali Corp?
$849,000 $1,199,000 $3,495,000 $1,449,000