Part (a) was done reasonably well with most candidates determining an appropriate discount rate and correctly discounting the cash flows to obtain the corporate value and the value to the equity holders. Common, smaller, errors included not converting the asset beta into the equity beta; deducting tax from the free cash flows; growing cash flows from the wrong year and not recognising that the debt value has to be deducted from the value of the company to find the value attributable to equity holders. Often assumptions were stated but not discussed.