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Microsoft has the following projected sales, costs, net investment, and free cash flow in billions. The anticipated growth rate in free cash flows after year
Microsoft has the following projected sales, costs, net investment, and free cash flow in billions. The anticipated growth rate in free cash flows after year 6 is 3% per year forever. There are 7.54 billion shares outstanding, and investors require a return of 7% on the company's stock. Using the constant growth model to find the terminal value, then calculate the price of the company's stock. (Round to 2 decimals)
($ in billions) | 1 | 2 | 3 | 4 | 5 | 6 |
Sales | 217.5 | 234.9 | 249 | 258.9 | 264.2 | 275.3 |
Costs | 120 | 125 | 130 | 135 | 140 | 145 |
Taxes | 16 | 17 | 18 | 18.5 | 19 | 20 |
OCF | 81.5 | 92.9 | 101 | 105.4 | 105.2 | 110.3 |
Net Investment | 20 | 22 | 24 | 26 | 29 | 29 |
FCF | 61.5 | 70.9 | 77 | 79.4 | 76.2 | 81.3 |
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