American Atlantic Railroad reported net income of $770 million in 1995, after interest expenses of $320 million. It reported depreciation of $960 million in that year, and capital spending was $1.2 billion. American Atlantic paid 40% of its earnings as dividends and working capital requirements are negligible. American Atlantic Railroad had $4 billion in debt outstanding on the books, rated AA (carrying a yield to maturity of 8% ), trading at par. The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. The Treasury bond rate is 7%, the tax rate is 36%, and the expected return on the market is 12.5%. Estimate the free cash flow to the firm in 1995. Estimate the value of the firm at the end of 1995 . Estimate the value of equity at the end of 1995 , and the value per share, using the FCFF approach.