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eBook Problem 8 - 1 0 You are building a free cash flow to the firm model. You expect sales to grow from $ 1

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Problem 8-10
You are building a free cash flow to the firm model. You expect sales to grow from $1.8 billion for the year that just ended to $2.34 billion five years from now. Assume that the company will not become any more or less efficient in the future. Assume that the company will grow at a constant rate for 5 years, and then at a constant rate of 4.887395% for year 6 and onward after that. Use the following information to calculate the value of the equity on a per-share basis.
Assume that the company currently has $648 million of net PP&E.
The company currently has $216 million of net working capital.
The company has operating margins of 11 percent and has an effective tax rate of 29 percent.
The company has a weighted average cost of capital of 10 percent. This is based on a capital structure of two-thirds equity and one-third debt.
The firm has 3 million shares outstanding.
Do not round intermediate calculations. Round your answer to the nearest cent.

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