a. Following information is about Steady plc, a company in steady state. Operating income £500m Tax rate 25% Dividend Payout ratio 70% Capital expenditure £500m Depreciation £200m Net Operating Working Capital £250m Book value of Debt £600m Number of shares outstanding 100m Beta 1.05 Steady state growth rate 1% Risk-free rate 2% Equity risk premium 6% Pre-tax cost of debt 4% Current price per share £10 Required: i. Estimate the equity value per share using the Free Cash Flow to Firm model. Use the current share price for calculating the WACC.

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