Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Microsoft Co . has the following projected sales, costs, net investment, and free cash flow in millions. The anticipated growth rate in free cash flows

Microsoft Co. has the following projected sales, costs, net investment, and free cash flow in millions. The anticipated growth rate in free cash flows after year 6 is 5% per year forever. There are 7.43 billion shares outstanding, and investors require a return of 8% on the company's stock and a comparable P/E ratio of 21. Calculate the company stock price using the constant growth model to find the terminal value. (Round to 2 decimals)
($ in Billions)123456
Sales 232244256269282296
Costs 120126132139146153
Taxes 404244464850
OCF (net income)727680848892
Net investment 505355586164
FCF 222325262728

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Complete Personal Finance Handbook

Authors: Teri B Clark

1st Edition

160138047X, 978-1601380470

More Books

Students also viewed these Finance questions