Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company is projected to generate free cash flows of $176 million next year and $193 million at the end of year 2, after

  

A company is projected to generate free cash flows of $176 million next year and $193 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company's cost of capital is 13.1%. It has $114 million worth of debt and $74 million of cash. There are 21 million shares outstanding. If the exit multiple for this company's free cash flows (EV/FCFF) is 7.4, what's your estimate of the company's stock price? Round to one decimal place. Type your numeric answer and submit

Step by Step Solution

3.39 Rating (149 Votes )

There are 3 Steps involved in it

Step: 1

Terminal value of the company Exit multiple FCFF in year 2 74 193 million 142820 million Ent... 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_2

Step: 3

blur-text-image_3

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

Financial Management For Decision Makers

Authors: Peter Atrill, Paul Hurley

2nd Canadian Edition

138011605, 978-0138011604

More Books

Students also viewed these Corporate Finance questions

Question

Write the income statement equation and define each element.

Answered: 1 week ago