Question 22 [4 points] Using the Free Cash Flow to Firm approach, you have valued the stock of Sunnyside Inc., a retail company, at $10.4 per share. Sunnyside has 100 million shares outstanding, trading at $8.75 per share. Set out below is the firm's balance sheet at the end of Year 0: From notes to accounts: - Long-term investment represents a 10% equity interest in OPQ Inc., a real estate company. OPQ has 120 million shares outstanding. It paid a dividend of $0.5 per share in Year 0, and dividends are expected to grow at a constant rate of 2% forever. OPQ's cost of equity is 10%. - Long term bond represents a single bond issue outstanding with a face value of $300 million. The bond has a coupon rate of 5% (payable semiannually), 7 years to maturity, and is quoted at a YTM of 4.8%. - Non-controlling interest represents the equity interest in Mars Inc. not owned by Sunnyside. Mars, a 70% owned consolidated subsidiary of Sunnyside, is a separately listed company, with 160 million shares outstanding, trading at $2.2 per share. - At the end of Year 0, Sunnyside had (i) RSUs of 4 million units and (ii) employee stock options of 2 million units of which 1 million were unvested. The expected forfeiture rate for RSUs and options is 5%. The option has a fair value of $9.2 per unit. You note that there are 35 million call options on Sunnyside traded on the stock exchange, with a market value of $2.85 per unit. These options were issued by ABC Investment Bank. a. What is the intrinsic equity value available to Sunnyside's shareholders and option holders? [1.5 points] b. What is the intrinsic value of the firm? [1.5 points] c. What is the intrinsic value of the operating assets? [1 point] END OF PAPER