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Question 1

Problem 1 - Using FCFE
It is 12/31/15. The following data have been accumulated from analysis of Frank
Beamer Incorporated:
	1	2	3
	2016E	2017E	2018E
Annual FCFE	$ 120,000	$ 160,000	$ 180,000
Given:
Net Debt	$ 500,000
Shares Outstanding	200,000
Stock Price per share	$ 15.00
Effective Tax Rate	30.0%
WACC	8.0%
Beta	1.10
Risk Free Rate	4.00%
Equity Risk Premium	6.00%
Terminal Growth Rate	5.0%
Calculate the Equity Value per Share for Frank Beamer Incorporated
as of 12/31/15 using the Free Cash Flows to Equity Approach.
Is the stock current over or under valued?
As you work through the problem, fill in the following numbers:
Show work for partial credit.
Frank Beamer cost of equity	10.600%
Frank Beamer WACC	8%
Terminal Value in 2018 (Gordon Growth)
Enterprise Value
Equity Value
Equity Value per Share
Stock over or under valued?

Question 2

Problem 1 - using FCFF
It is 12/31/15. The following data have been accumulated from analysis of Frank
Beamer Incorporated:
	1	2	3
	2016E	2017E	2018E
Annual FCFF	$ 120,000	$ 160,000	$ 180,000
Given:
Net Debt	$ 500,000
Shares Outstanding	200,000
Stock Price per share	$ 15.00
Effective Tax Rate	30.0%
WACC	8.0%
Beta	1.10
Risk Free Rate	4.00%
Equity Risk Premium	6.00%
Terminal Growth Rate	5.0%
Calculate the Equity Value per Share for Frank Beamer Incorporated
as of 12/31/15 using the Free Cash Flows to the Firm Approach.
Is the stock current over or under valued?
As you work through the problem, fill in the following numbers:
Show work for partial credit.
Frank Beamer cost of equity
Frank Beamer WACC	8%
Terminal Value in 2018 (Gordon Growth)
Enterprise Value
Equity Value
Equity Value per Share
Stock over or under valued?

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