Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made at the beginning of 2016 are as follows: ($ millions) 2017 2018 2019 2020 2021 Net income 1.0 2.0 3.2 3.7 4.0 Investment 1.0 1.0 1.2 1.4 1.4 Free cash flow 0 1.0 2.0 2.3 2.6 Phoenix’s recovery will be complete by 2021, and there will be no further growth in free cash flow. a. Calculate the PV of free cash flow, assuming a cost of equity of 9%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value $ million b. Assume that Phoenix has 12 million shares outstanding. What is the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price per share $ c. What is Phoenix’s P/E ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio

    a)Esteem of secure on 2021 = FCF 2021/ ko

                                                    = 2.60/0.09 Million

                                                    = 28.89 million

    year unhindered Specie flow PV factor 9% PV
    1 0 0.9174 0.00
    2 1 0.8417 0.84
    3 2 0.7722 1.54
    4 2.3 0.7084 1.63
    5 2.6+28.89 0.6499 20.47
    Sum PV 24.48

    Hence, PV of unhindered specie flows ( esteem of equity) is 24.48 Million

    b) Compensation per distribute = sum esteem of equity/ No. of stocks outstanding

                                         = 24.48 million/ 12 million

                                         = 2.04

    c)

    Earnings per distribute EPS = decoy income/ No. of stocks outstanding

                                                    = 1 million/ 12 million

                                                    =0.0833

    P/E kinsman = compensation per distribute/ EPS

                       = 2.04/0.0833

                       = 24.48