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Abbey Naylor, CFA, has been directed by Carroll to determine the value of Sundanci's stock using the free cash flow to equity model.

Abbey Naylor, CFA, has been directed by Carroll to determine the value of Sundanci's stock using the free cash flow to equity model.  Naylor believes that Sundanci's FCFE will grow at 27 percent for two years and 13 percent thereafter.  Capital expeditures, depreciation, and working capital are all expected to increase proportionately with FCFE.
a) Calculate the amount of FCFE per share for the year 2000 using the data below.
INCOME STATEMENT:          1999          2000
Revenue                    $474          $598
Depreciation                 20            23
Other Operating Costs       368           460
Income Before Taxes          86           115
Taxes                        26            35
Net Income                   60            80
Dividends                    18            24
EPS                       $0.714         $0.952
Dividend Per Share        $0.214         $0.286
Common Shares Outstanding    84mil         84mil
BALENCE SHEET:
Current Assets             $201          $326
Net, PPE                    474           489
Total Assets               675           815
Current Liabilities          57           141
Long-term Debt                0             0
Total Liabilities           57           141
Shareolders Equity          618           674
Total liab. & Equity       675           815
Capital Expenditures         34            38
b) Calculate the current value of a share of Sundanci stock based on the two-stage FCFE model.  Show work.

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