The price of WatchBit’s stock is €45. ABC Investment Bank attempts to determine whether WatchBit is fairly priced. The f

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The price of WatchBit’s stock is €45. ABC Investment Bank
attempts to determine whether WatchBit is fairly priced. The
financial information ABC has assembled for this valuation is as
follows:  The required rates of return on WatchBit debt, common
stock and preferred stock are 7%, 12% and 8%, respectively.  The
target capital structure is: 30% debt, 15% preferred stock, and 55%
common stock.  The market value of debt is €145 million.  The
market value of preferred stock is €65million.  The Free Cash Flow
to the Firm (FCFF) for the year just ended is €28 million and is
expected to grow at a constant rate equal to 5% for the years that
follow.  WatchBit has 8 million outstanding shares.  The tax rate
is 30%.Calculate the estimated value per share for WatchBit stock
and decide whether it is underpriced or overpriced.