In this question we attempt to value a company (rather than a project) using the valuation technique we have learned so far. Specifically, the company is expected to generate the following cash flows for the next 5 years:

Years	1	2	3	4	5
Free Cash Flows ($M)	15	18	20	22	23

After year 5, the company's cash flows are expected to grow at a constant rate of 5% forever.

Beta of the company's stock is 1.2. The expected return of the S&P 500 Index is 12.5%. The T-bill rate is 3.5%.

1. Suppose that the company is financed with 100% equity. What is the value of the company today (t=0)?
2. Suppose the company is financed with 50% debt and 50% equity. The company's bonds currently trade at par and pay 7% coupons. The corporate tax rate for the company is 21%. What is the value of the company today (t=0)?