Answered step by step
Verified Expert Solution
Question
1 Approved Answer
New Millenium Company earned $2.9 million in net income last year. It took depreciation deductions of $304,000 and made new investments in working capital and
New Millenium Company earned $2.9 million in net income last year. It took depreciation deductions of $304,000 and made new investments in working capital and fixed assets of $100,000 and $358,000, respectively. a. What was New Millenium's free cash flow last year? b. Suppose that the company's free cash flow is expected to grow at 5% per year forever. If investors require a return of 9% on Millenium stock, what is the present value of Millenium's future free cash flows? c. New Millenium has 3.9 million shares of common stock outstanding. What is the per-share value of the company's common stock? d. What is the company's P/E ratio based on last year's earnings (i.e., trailing earnings)? e. What is the company's P/E ratio based on next year's earnings (assuming that earnings grow at the same rate as free cash flow). a. Millenium's free cash flow last year was $ (Round to the nearest dollar.)
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