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In the most recent fiscal year, a company reported net income of $850 million after...

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Accounting

In the most recent fiscal year, a company reported net income of $850 million after incurring $320 million in interest expenses. (The corporate tax rate was 36%. That year, it reported a $960 million depreciation and $1.2 billion in capital spending. The company also had $4 billion in debt outstanding, was rated AA (with an 11 percent yield to maturity), and was trading at par. The stock's beta is 1.20, and there were 200 million outstanding shares (trading at $60 each), with a book value of $5 billion. Union Pacific paid out 40% of its earnings as dividends, and working capital requirements are minimal. The Treasury bond rate is 7% and market risk premium is 5.5%.a. Estimate the FCFF for the most recent financial year. Showcalculations of each of the following:1. EBIT2. FCFFb. Estimate the value of the firm now.Show calculations of each of the following:1. Re-investment rate2. ROC3. Growth rate4. Cost of equity5. Cost of capital6. Value of the firmc. Estimate the value of equity.d. Estimate the value per share.

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