1. You have been assigned the task of using the corporate, or free cash flow, model to estimate Petri Corporation's intrinsic value. The firm's weighted cost of capital (WACC) is 10.00%, its end-of-year free cash flow (FCF1) is expected to be $75.0 million, the FCFs are expected to grow at a constant rate of 5.00% a year in the future, the company has $200 million of long-term debt and preferred stock, and it has 25 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock? Show work.
a. $48.00 b. $51.82 c. $43.33 d. $52.00
2. You would like to have $850,000 when you retire in 25 years. How much should you invest each quarter if you can earn a rate of 6.3% compounded quarterly?
a) How much should you deposit each quarter?
b) How much total money will you put in the account?
c) How much total interest will you earn?