Question
If you assume that FCFE will grow at 5% every year going forward, and investors' required rate of return to invest in the firm is
If you assume that FCFE will grow at 5% every year going forward, and investors' required rate of return to invest in the firm is 8.3%, what would be the price of the firm's stock? If you instead assume that FCFE will grow by 10% in the next 10 years and then slow down to 0% thereafter, what would be the price of the firm's stock? Are your price estimates in these two cases higher or lower than the the current market price? What are some of the possible explanations for why your estimates are higher or lower than the current market price?
FCFE in year 0 = 92,953,000
Shares Outstanding = 16.32 Billion
Please provide explanation.
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