Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:

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After then, the free cash flows are expected to grow at the industry average of 4.3% per year.
Using the discounted free cash flow model and a weighted average cost of capital of 14.4%:

a. Estimate the enterprise value of Heavy Metal.

b. If Heavy Metal has no excess cash, debt of $280 million, and 35 million shares outstanding, estimate its share price.

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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Question Posted: Feb 29, 2024 04:01 AM

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Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:

Question:

Year FCF ($ millions) 1 51.3 2 69.7 3 79.5 4 74.3 5 82.7

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Corporate Finance The Core

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