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A firm is expected to have free cash flow of $4 million next year, after that it will grow at 5% forever. The equity
A firm is expected to have free cash flow of $4 million next year, after that it will grow at 5% forever. The equity cost of capital of the firm is 12% while the weighted average cost of capital is 10%. The firm has $1 million cash, $6 million debt, and 5 million shares of stock. (a) What should be the enterprise value of the firm? (4 points) (b) What should be the stock price per share?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
