Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

[10 points] At the end of 2016, Newerks Inc. forecasts that its free cash flow will be $50 million in 2017, $60 million in 2018,

[10 points] At the end of 2016, Newerks Inc. forecasts that its free cash flow will be $50 million in 2017, $60 million in 2018, and $72 million in 2019. After 2019, Newerks expects its free cash flow earnings to grow at an annual rate of 6%. Newerks has $75 million in debt and $25 million in cash. If Newerks has 5 million shares outstanding and a cost of capital of 14%, what is Newerks stock price at the end of 2016?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Lost Continent The BBCs Europe Editor On Europes Darkest Hour Since World War Two

Authors: Gavin Hewitt

1st Edition

1444764829, 9781444764826

More Books

Students also viewed these Accounting questions