You have $4,000,000 in a portfolio consisting of 8 stocks wi…

You have $4,000,000 in a portfolio consisting of 8 stocks with $500,000 invested in each.  The portfolio’s beta is 1.80.  You plan to sell Stock A in your portfolio and use the proceeds to buy Stock B.  Stock A has a beta of 1.50, while Stock B’s beta is 0.60.  After this transaction, what will be the portfolio’s new beta? (Hint:  Make sure to carry out your calculation to 4 decimal places.)

You have been assigned the task of using the corporate, or f…

You have been assigned the task of using the corporate, or free cash flow, model to estimate Baek Corporation’s intrinsic value.  The firm’s WACC is 11%, its end-of-year free cash flow (FCF1) is expected to be $400 million, and the FCFs are expected to grow at a 15% rate for each of the next two years (t = 2 and 3).  After t = 3, the free cash flows are expected to grow forever at a constant rate of 6% per year.  The firm has $250 million of nonoperating assets.  The company has $620.67 million in long-term debt, no preferred stock, and it has 125 million shares of common stock outstanding.  What is the firm’s estimated intrinsic value per share of common stock?