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Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:
Year | 1 | 2 | 3 | 4 | 5 |
FCF ($ million) | 51.5 | 66.3 | 78.3 | 76.4 | 82.3 |
Thereafter, the free cash flows are expected to grow at the industry average of 3.6 % per year. Using the discounted free cash flow model and a weighted average cost of capital of
14.4 %:
a.Estimate the enterprise value of Heavy Metal.
b.If Heavy Metal has no excess cash, debt of $291 million, and 40 million shares outstanding, estimate its share price
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