Covan, Inc. is expected to have the following free cash flow:

a$.$ Covan has $8$ million shares outstanding, $$3$ million in excess cash, and it has no debt. If its cost of capital is $13\%,$ what should be its stock price?

Covan reinvests all its FCF and has no plans to add debt or change its cash holdings. If you plan to sell Covan at the beginning of year $2,$ what is its expected price?

c$.$ Assume you bought Covan stock at the beginning of year $1.$ What is your expected return from holding Covan stock until year $2?$

Data table

o$,$ what should be its stock price?

$($Click on the following icon

$\backslash$table$[[$Year$,1,2,3,4,$in order to copy its contents into a spreadsheet.$)],[$FCF $($$ million$),12,14,15,16,$Grow by $4\%$ per year$]]$

he beginning of year $2,$ what is its expected price?

tock until year $2?$

s$.)$

Time Remaining: $01$:$15$:$22$

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