Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume you have a company that has the following financials for fiscal year 2020: $731 million in cash $601 million in book value of debt

Assume you have a company that has the following financials for fiscal year 2020: $731 million in cash $601 million in book value of debt $572 million in market value of debt The company is expected to generate a free cash flow of $200 million in 2021. The growth rates of the free cash flows will be 4% in 2022 (e.g., Year 2022 FCF = (1+4%)*Year 2021 FCF), 2% in 2023 (e.g., Year 2023 FCF = (1+2%)*Year 2022 FCF), and -3% (yes, negative growth rate) per year after 2023. If the firm's weighted average cost of capital is 10% and the firm has 200 million shares outstanding in 2020, then after its 2020 annual report is released to the public, the firm's equity value per share is $____

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions