Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company had free-cash-flows of $155,464.62 in millions in the past year and has expected growth rate of 1.70% in the next year, 4.80% in

image text in transcribed
A company had free-cash-flows of $155,464.62 in millions in the past year and has expected growth rate of 1.70% in the next year, 4.80% in the second year, 1.00% in the third year and 3.60% in the fourth year. Finally the firm expects the growth to become 5.00% long-term thereafter. Given that the weighted average cost of capital (WACC) for the firm is 20.87%, what is the expected firm value and share price it there are 6,016,000 shares outstanding? (Hint: Use Discounted Free-Cash Flows model a. The market value of the firm is: $803,621.45 and the share price is $0.13. b. The market value of the firm is: $946,428.00 and the share price is $0.16. c. The market value of the firm is: $1,113,034.50 and the share price is $0.19. d. The market value of the firm is: $957,569.88 and the share price is $0.16.

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

More Books

Students also viewed these Finance questions