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ABC Corp. plans to finance its expansion by borrowing $20 million and halting dividends. No other debt or preferred stock is in the firm. The
ABC Corp. plans to finance its expansion by borrowing $20 million and halting dividends. No other debt or preferred stock is in the firm. The projected free cash flows are, Year 1 FCF = $4 million, Year 2 FCF = $5 million, and Year 3 FCF = $6 million. The FCFs are expected to grow at constant rate of 6% after year 3. The WACC is 16%, and the company has 1 million shares of stock. What should be the current stock price?
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