Question
A company had free-cash-flows of $241,311.35 in millions in the past year and has expected growth rate of 3.70% in the next year, 1.60% in
A company had free-cash-flows of $241,311.35 in millions in the past year and has expected growth rate of 3.70% in the next year, 1.60% in the second year, 3.80% in the third year and 2.20% 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 9.36%, what is the expected firm value and share price if there are 1,533,000 shares outstanding? (Hint: use Discounted Free-Cash Flows model) a. The market value of the firm is: $5,349,345.05 and the share price is $3.49. b. The market value of the firm is: $5,372,302.94 and the share price is $3.50. c. The market value of the firm is: $4,126,902.04 and the share price is $2.69. d. The market value of the firm is: $4,420,808.58 and the share price is $2.88.
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