ABC Company has FCFF of $ 1.7 billion and FCFE of $ 1.3 billion. WACC is 11 percent, and its required rate of return on equity is 13 percent. FCFF is expected to grow forever at 7 percent, and FCFE is expected to grow forever at 7.5 percent. ABC Company has debt outstanding of $ 15 billion.
a) What is the total value of ABC’s equity using the FCFF valuation approach?
b) What is the total value of ABC’s equity using the FCFE valuation approach?