Please help! Union Pacific Railroad reported net income of $770 million in 1993 after interest expenses of $320 million.

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answerhappygod
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Please help! Union Pacific Railroad reported net income of $770 million in 1993 after interest expenses of $320 million.

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Please help!
Union Pacific Railroad reported net income of $770 million
in 1993 after interest expenses of $320 million. (The corporate tax
rate was 36%.) It reported depreciation of $960 million in that
year, and capital spending was $1.2 billion. The firm also had S4
billion in debt outstanding on the books, rated AA (carrying a
yield to maturity of 8%) and trading at par (up from $3.8 billion
at the end of 1992). The beta of the stock was 1.05, and there were
200 million shares outstanding (trading at $60 per share) with a
book value of $5 billion. Union Pacific's working capital
requirements were negligible. (The Treasury bond rate was 7%, and
the risk premium was 5.5%.)
a. Estimate the free cash flow to the firm in 1993.
b. Estimate the value of the firm at the end of 1993.
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