Answer Happy

11a 123 Warehousing is expected to generate a
free cash flow (FCF) of $10,270.00 million this year (FCF₁ =
$10,270.00 million), and the FCF is expected to grow at a rate of
21.40% over the following two years (FCF₂ and FCF₃). After the
third year, however, the FCF is expected to grow at a constant rate
of 2.82% per year, which will last forever (FCF₄). Assume the firm
has no non-operating assets. If 123 Warehousing’s weighted average
cost of capital (WACC) is 8.46%, what is the current total firm
value of 123 Warehousing? (Note: Round all intermediate
calculations to two decimal places.)
a) $307,865.25 million
b) $248,201.19 million
c) $297,841.43 million
d) $31,930.68 million
11b. 123 Warehousing’s debt has a market
value of $186,151 million, and 123 Warehousing has no preferred
stock. If 123 Warehousing has 225 million shares of common stock
outstanding, what is 123 Warehousing’s estimated intrinsic value
per share of common stock? (Note: Round all intermediate
calculations to two decimal places.)
a) $827.34
b) $275.78
c) $303.36
d) $274.78