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DP is evaluating acquiring PA by using the DCF valuation approach. It has collected the...

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DP is evaluating acquiring PA by using the DCF valuation approach. It has collected the following information: PA has net income of $250 million, depreciation of $90 million, capital expenditures of $170 million and an increase in working capital of $40 million. Interest expenses are $150 million and the current market value of the debt is $1,800 million. FCFF is expected to grow at 6% indefinitely at 6%. The tax rate is 30%. PA is financed with 40% debt and 60% equity. The pre-tax cost of debt is 9% and the pre-tax cost of equity is 13%. It has 10 million shares outstanding. Estimate the value per share. Select one: a. $396.62 b. 138.98 C. $576.62 The correct answer is: $396.62

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