Use the below information for Q#6-10.

DoPharm is evaluating a takeover of Phaneuf Accelerator Inc. (PAI) by using the FCF and FCFE valuation approaches. DoPharm has collected the following information for the current year: PAI has sales of $1,000 million with 40% operating margin, depreciation of $90 million, capital expenditures of $170 million, and an increase in working capital of $40 million. Interest expenses are $50 million. The current market value of PAIs outstanding debt is $1,500 million. The company has retired the existing bonds for $10 million. FCF and FCFE are expected to grow at 10% for the next five years and 6% after that. The tax rate is 30%. PAI financed with 40% debt and 60% equity. Its before-tax cost of debt is 9%, and its cost of equity is 13%. The number of shares outstanding is 100 million. 6. Estimate the current years free cash flow of PAI in millions.

7. Estimate cost of capital of PAI in %. 8. Based on the free cash flow approach, estimate firm value of PAI in millions. Based on this approach, what is stock price of PAI?

9.Estimate the current years free cash flow to equity of PAI. Based on the free cash flow to equity approach, estimate stock price of PAI. Using this approach, what is firm value of PAI? 10. From DoPharms perspective, what is the critical missing piece of information needed to estimate the value of the takeover?