QUESTION 5 [6 marks] Nirvana Corporation is expected to generate the following free cash flows over the next five years: 4 Year FCF (S million) 12 442 22 622 32 732 42 852 52 902 After year 5, the free cash flows are expected to grow perpetually at the industry average of 3% per year. Assume all cash flows come in at the middle of each year. a) Using the discounted free cash flow model and an after-tax weighted average cost of capital of 12% to estimate the enterprise value of Nirvana. (4 marks 'QUESTION 5 continued: b) If Nirvana has no excess cash, debt of $340 million, and 50 million shares outstanding, estimate its share price. (2 marks) I 1 1 1 1 1 1 2 1 2 1 2 2 1 I 1