Common stock value All growth models.

Herman Crab has debt with a market value of $50 million, preferred stock with a par value of $2.5 million and common stock with a book value of 10,000.

There are 200,000 shares outstanding. What is the most you would pay for a share of stock given the following:

Year / Free Cash Flow 0 / 1,000,000 1 / 2,000,000 2 / 2,500,000 3 / 2,750,000

You expect the free cash flow to grow at 6% after year 3 and the Weighted Average Cost of Capital is 10% What is the Price per Share?