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4. An enterprise is expected to have the following free cash flows: Year FCF 1 10 2 12 3 13 4 14 Grow by 4%
4. An enterprise is expected to have the following free cash flows: Year FCF 1 10 2 12 3 13 4 14 Grow by 4% per year a. Firm has 8 million shares outstanding, $3 million in excess cash, and it has no debt. If its cost of capital is 12%, what should its stock price be? b. Firm has no plans to add debt or change its cash holdings. What should you expect its price to be if you sell stock at the beginning of year 2
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