Topic 5 Free Cash Flow Valuation Additional Practice Problems Consider the following information for the fictional firm LL Coolio, Inc. Assume that the firm is in a mature industry and has a constant growth rate. - LL Coolio's bonds have a credit spread of 515 basis points and are currently quoted at 101,535 . There are 7,250 bonds outstanding. - The firm's stock is currently priced at $19.85 and there are 850,000 common shares outstanding. - The correlation between the retums on LL Coolio's stock and the S\&P/TSX Composite Index is 0.40 . - The annualized volatilities of the returns on LL Coolio's stock and the S\&PTTSX Composite Index are 32.45% and 14.25%, respectively. - The current Government of Canada 10-Year Benchmark Bond Yield is 1.15% and the expected return on the S\&PITSX Composite Index is 9.55%. Note: Short-term debt is considered a 'cash' liability and as such if should not be included in your Non-Cash Working Capital. It should, however, be included in your Net Borrowing. i. Is LL Coolio's stock a buy or a sell? ii. What is the expected appreciation/depreciation in LL Coolio's stock price (in \$ and %)