Matthew Wyatt is evaluating Euro Stores, Inc. (ESI) by using the free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) valuation models. He has collected the following information:

In the most recent period, ESI had net income of 320 million, depreciation of 90 million, fixed capital investment of 190 million, and working capital investment of 45 million.

ESI has a target debt ratio of 30 percent.

Interest expense in the most recent period is 420 million and the market value of debt is 6,000 million.

The before-tax cost of debt is 6% and the cost of equity is 14%. The tax rate is 30%.

ESI has 10 million shares outstanding.

FCFF is expected to grow at 6% and FCFE is expected to grow at 7% into perpetuity.

Using the FCFF valuation model, estimate the per-share intrinsic value of equity.

a. $365.43

b. $382.49

c. $527.45

d. $982.49

Using the FCFE valuation model, estimate the per-share intrinsic value of equity.

a. $345.23

b. $360.08

c. $375.26

d. $382.49