Assume market rate of return of 14%, risk-free rate of 4% and beta of 0.98 for BEA Systems. Assume also that BEA will continue to grow at its recent average annual growth rate of 9% for indefinite period. Prepare free cash flow projections for BEA and estimate its value. Does Oracle's initial offer of $17 per share undervalue BEA? What about the $19.375?

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