Question
Assume you have a company that has the following financials for fiscal year 2020. $300 million in cash $600 million in book value of debt
Assume you have a company that has the following financials for fiscal year 2020.
$300 million in cash
$600 million in book value of debt
$500 million in market value of debt
$1,000 million in book value of equity
The company will generate a net income of $350 million and a free cash flow of $200 million in 2021. The growth rates of the free cash flows will be 4% in 2022, 2% in 2023, and -2% (yes negative growth rate) per year after 2023. If the cost of equity is 12%m the weighted average cost of capital is 8%, and the firm has 100 million shares outstanding in 2020, then the firm's equity value per share as of 2020 is $______________?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started