Selected data for the Derby Corporation are shown here. Use the data to answer the following questions.

a. Calculate the estimated horizon value (i.e., the value of operations at the end of the forecast period immediately after the Year-4 free cash flow). Assume growth becomes constant after Year 3.

b. Calculate the present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations.

c. Calculate the estimated Year-0 price per share of common equity.

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INPUTS (In Millions) Year Current Projected 0 Free cash flow Marketable securities Notes payable Long-term bonds Preferred stock WACC Number of shares of stock -$20.0 $20.0 $80.0 $84.0 $40 $100 $300 $50 9.00% 40