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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) | 51.6 | 67.2 | 78.2 | 74.9 | 80.4 |
After that, the free cash flows are expected to grow at the industry average of 4.3% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.9%:
a. Estimate the enterprise value of Heavy Metal.
b. If Heavy Metal has no excess cash, debt of $314 million, and 42 million shares outstanding, estimate its share price.
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