Question
Micro Bike Company has short term investments of $50, debt of $1,500, and preferred stock of $200. The equity of the Micro Bike has 100
Micro Bike Company has short term investments of $50, debt of $1,500, and preferred stock of $200. The equity of the Micro Bike has 100 shares. The company forecasts the following:
| 2015 | 2016 | 2017 | 2018 | 2019 | |
| Free Cash Flow | $30 | $90 | $130 | $210 | $220 |
| Target WACC | 10% | 10% | 10% | 10% | 10% |
| Free Cash Flow Growth | 15% | 200% | 44.4% | 61.5% | 4.8% |
a. What is the Present Value of Free Cash Flows?
b.What is the Present Value of the Horizon Value?
c. What is the estimated intrinsic value of the equity?
d. What is the estimated intrinic stock price?
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Global Corporate Finance A Focused Approach
Authors: Kenneth Kim, Suk Kim
3rd Edition
9811207119, 9789811207112
