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) 53 0 68 0 78 0 75 0 82 0 Thereafter, the free cash flows are expected to grow at the industry average of 4 0 per year Using the discounted free cash flow model and a weighted average cost of capital of 14 0 a Estimate the enterprise value of Heavy Metal b If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price a Estimate the enterprise value of Heavy Metal The enterprise value will be $nothing million (Round to two decimal places ) Heavy Metal Corporation is expected to generate the following free cash flows over the next five years 1 2 4 5 Year FCF (S million) 3 78 0 53 0 68 0 75 0 82 0 Thereafter, the free cash flows are expected to grow at the industry average of 4 0 per year Using the discounted free cash flow model and a weighted average cost of capital of 14 0 a Estimate the enterprise value of Heavy Metal b If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price a Estimate the enterprise value of Heavy Metal The enterprise value will be $ million (Round to two decimal places )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 11, 2024

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)	53.0	68.0	78.0	75.0	82.0

Thereafter, the free cash flows are expected to grow at the industry average of

4.0%

per year. Using the discounted free cash flow model and a weighted average cost of capital of

14.0%:

a.Estimate the enterprise value of Heavy Metal.

b.If Heavy Metal has no excess cash, debt of

$300

million, and

million shares outstanding, estimate its share price.

a.Estimate the enterprise value of Heavy Metal.

The enterprise value will be

$nothing

million.(Round to two decimal places.)

image text in transcribed

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: 1 2 4 5 Year FCF (S million) 3 78.0 53.0 68.0 75.0 82.0 Thereafter, the free cash flows are expected to grow at the industry average of 4.0% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14.0%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price. a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ million. (Round to two decimal places.)