Problem #$7$: You forecast for Panther Corp. the following unlevered cash flows:

Year $1$: $$243$ mil.

Year $2$: $$350$ mil.

Year $3$: $$538$ mil.

Year $4$: $$631$ mil

Year $5$: $$663$ mil.

Year $6$ and on: $2\mathrm{.}5\%$ annual growth

Assume the firm$$s unlevered cost of capital is $8\%,$ its cost of debt is $4\%,$ and it currently has a

debt level of $$800$ million which is composed of a single large bank loan. The loan is structured

firm will pay $$200$ million of principal at the end of each of the next $4$ years. The firm has no

plans to take on any additional new debt in the future. The corporate tax rate is $20\%.$

$($a$)$ Calculate the value of the firm using the APV approach

$($b$)$ Calculate the firm$$s WACC as of the start of year $1,$ year $2,$ year $3,$ and year $4$

$($c$)$ Calculate the firm$$s free cash flow to equity in years $1$ through $4$