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Google forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 15.0%, and the FCFs are expected to continue
Google forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 15.0%, and the FCFs are expected to continue growing at a 4.0% rate after Year 3.
Year 1 2 3
FCF $15.0 $10.0 $40.0 respectively
a. What is the firm's total corporate value, in millions?
b. What is the estimated stock price if the firm has $4 million in marketable securities, $10 million in preferred stock, $40 million in debt and 12 million shares outstanding?
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