Cirrus Radio is a multi-format, group radio station owner with operations in the top 100 US markets. The company is traded on the NASDAQ stock exchange. Donna Pringle has estimated the normalized FCFE for Cirrus Radio to be $5.25 per share for the year just ended. The real US rate of return is estimated to be 8.25 percent. To estimate the required return for Cirrus Radio, Donna makes the following adjustments to the real country return: an industry adjustment of +0.75 percent, a size adjustment of -0.50 percent and a leverage adjustment of +0.25 percent. The long-term real US growth rate is estimated to be 2.25 percent, and Donna expects the real growth rate of Cirrus to track the country rate.

A. What is the real required rate of return for Cirrus Radio?

B. Using the single-stage FCFE valuation model and real values for the discount rate and FCFE growth rate, estimate the value of one share of Cirrus Radio.