Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Luthor Corp. is expected to generate a free cash flow (FCF) of $10,320.00 million this year (FCF 1=$10,320.00 million), and the FCF is expected to
Luthor Corp. is expected to generate a free cash flow (FCF) of $10,320.00 million this year (FCF 1=$10,320.00 million), and the FCF is expected to grow at a rate of 25.00% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 3.90% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Luthor Corp.'s weighted average cost of capital (WACC) is 11.70%, what is the current total firm value of Luthor Corp.? (Note: Round all intermediate calculations to two decimal places.) $245,941.65 million $31,148.32 million $222,322.96 million $185,269.13 million Luthor Corp.'s debt has a market value of $138,952 million, and Luthor Corp. has no preferred stock. If Luthor Corp. has 750 million shares of common stock outstanding, what is Luthor Corp.'s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.) $60.76$67.93$185.27$61.76
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started