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At the beginning of its fiscal year 2022, an analyst made the following forecast for GM, Inc., the consumer foods company, for 2022-2025 (in
At the beginning of its fiscal year 2022, an analyst made the following forecast for GM, Inc., the consumer foods company, for 2022-2025 (in millions of dollars): 2022 2023 2024 2025 Cash flow from operations 2,014 2,057 2,095 2,107 Cash investment in operations (300) (380) (442) (470) GM Corp reported $6,192 million in short-term and long-term debt at the end of 2021 but very little in interest-bearing debt assets. Use a required return of 9 percent to calculate both the enterprise value and equity value for GM Corp at the beginning of 2022 under two forecasts for long-run cash flows: a. Free cash flow will grow at 3 percent per year after 2025. GM Corp had 369 million shares outstanding at the end of 2022, trading at $47 per share. Calculate value per share.
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