Question
Bolted company is expected to generate cash flow of $100 per share at the end of the current year. Over the following three years,
Bolted company is expected to generate cash flow of $100 per share at the end of the current year. Over the following three years, this cash flow will grow by 20%, 15% and 10% respectively. The cash flow growth rate will then decline from 10% to 5% over the next 10 years, then continue to grow at a 5% annual rate for the foreseeable future. Assuming that a 10% discount rate is appropriate for bolted, estimate the value per share as of today using the discounted cash flow method.
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Intermediate accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
7th edition
978-0077614041, 9780077446475, 77614046, 007744647X, 77647092, 978-0077647094
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