Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Gonzales Corporation generated free cash flow of $88 million this year. For the next two years, the company's free cash flow is expected to grow
Gonzales Corporation generated free cash flow of
$88
million this year. For the next two years, the company's free cash flow is expected to grow at a rate of
9%.
After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year. If the weighted average cost of capital is
10%
and Gonzales Corporation has cash of
$80
million, debt of
$250
million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?
A.
$17.27
B.
$14.26
C.
$15.01
D.
$19.52
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started