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1. 2. A company is projected to have a free cash flow of $250 million next year, growing at a 7% rate until the end
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A company is projected to have a free cash flow of $250 million next year, growing at a 7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.0% in perpetuity. The company's cost of capital is 12.0%. The company owes $60 million to lenders and has $35 million in cash. If it has 100 million shares outstanding, what is your estimate for its stock price? Round to one decimal place. (e.g., $4.32 = 4.3) Numeric Answer: You are creating a portfolio of two stocks. The first one has a standard deviation of 15% and the second one has a standard deviation of 45%. The correlation coefficient between the returns of the two is-0.1. You will invest 60% of the portfolio in the first stock and the rest in the second stock. What will be the standard deviation of this portfolio's returns? Answer in percent, rounded to two decimal places (e.g., 4.32%=4.32). Numeric 2.
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