Question
Camper,Inc. is interested in acquiring Baxter Corp.Baxter has 30 million shares outstanding.Its WACC is 11% and the risk free rate is 4%.Baxter has $5million in
Camper,Inc. is interested in acquiring Baxter Corp.Baxter has 30 million shares outstanding.Its WACC is 11% and the risk free rate is 4%.Baxter has $5million in debt.Baxter's free cash flow is $20 million annually and is expected to grow at a constant rate of 5% per year. Calculate the intrinsic value of Baxter's stock, using the formulaVop = FCF0(1+g)/WACC - g.
$295 million
$328 million
$345 million
$350 million
None of the above
show work.
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Equity Asset Valuation
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
2nd Edition
470571439, 470571438, 9781118364123 , 978-0470571439
