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Caprice Company expects to generate free cash flow of $120,000 at the end of this year, and is expected to grow at 10 percent per
Caprice Company expects to generate free cash flow of $120,000 at the end of this year, and is expected to grow at 10 percent per year for the next 4 years after which the growth rate will decrease to 5 percent per year indefinitely. If the firm's required return is 12 percent, the market value of the debt is $300,000, the market value of the preferred stock is $70,000, and the company has 100,000 shares of stock outstanding, what is the value of Caprice Company's stock?
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