Question
EF company wishes to assess the value of its AS Devision. The AS Devisions estimated free cash flow for shareholders (ECF) each year 2020 through
EF company wishes to assess the value of its AS Devision. The AS Devisions estimated free cash flow for shareholders (ECF) each year 2020 through 2023 is given in the following table. Beyond 2023 to infinity, the firm expects its free cash flow to grow at 3% annually. The required ate of retyrn by shareholders is equal 12%
| year | FCF |
| 2020 | 700 000 |
| 2021 | 1 200 000 |
| 2022 | 1 100 000 |
| 2023 | 1 200 000 |
- Use the ECF valuation model to estimate the value of entire AS Devision.
- AS Division is a public company and it has 500 000 shares outstanding. Use your findings from part a to calculate its value per share.
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Canadian Public Finance
Authors: Genevieve Tellier
1st Edition
1487594410, 978-1487594411
