The ABC Corporation's earnings from operation before interest and taxes was $2 million in the year just ended. The tax rate is 35%. The capital expenditure was 20% of its EBIT. Depreciation was $200,000 in the year just ended. The decreases in net working capital last year was $400,000. Also, in the year just ended, ABC Corporation paid $600,000 as interest expenses and increases $350,000 net debt. (total 15 points)

a. What is free cash flow to the firm (FCFF) in the year just ended? (5 points)

b. What is free cash flow to the equity in the year just ended? (5 points)

c. Suppose ABC Corporation is expected to growth at 15% for first three years and finally will grow at 5% forever. The appropriate market cap rate for first three years is 18% and 10% for the steady-state. What's the value of the company's equity? (5 points)