Question: 1 . IST Co. is undergoing a restructuring, and its free cash flows are expected to vary considerably during the next few years. However, the

1. IST Co. is undergoing a restructuring, and its free cash flows are expected to vary considerably during the next few years. However, the FCF is expected to be $200,000,000 in Year 4, and the FCF growth rate is expected to be a constant 2% beyond that point. The WACC is 10.0%. What is the horizon (or continuing) value at t = 4?

2. Durmush Technologies was founded 8 years ago in NIGDE. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8.00% thereafter. Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 11.00%, what is your estimate of the stock's current value?

Year	0	1	2	3	4	5	6
Growth rate	NA	NA	NA	NA	30.00%	15.00%	8.00%
Dividends	$0.000	$0.000	$0.000	$0.250	$0.325	$0.374	$0.404

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