Question
A company forecasts the free cash flows (FCFs) (in millions) shown below. The weighted average cost of capital (WACC) is 8%, and the FCFs are
A company forecasts the free cash flows (FCFs) (in millions) shown below. The weighted average cost of capital (WACC) is 8%, and the FCFs are expected to continue growing at a 3% rate after Year 4. The firm has $90.14 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 25 million shares outstanding.
| Year | 1 | 2 | 3 | 4 |
| FCF | $10 | $20 | $40 | $65 |
a. What is the value of the stock price today (Year 0)?
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Globalization Gating And Risk Finance
Authors: Unurjargal Nyambuu, Charles S. Tapiero
1st Edition
1119252652, 978-1119252658
