Please solve ASAP have 10 mins left
Covan, Inc. is expected to have the following free cash flows. 3 4 Year FCF 1 11 2 13 14 15 grow by 5% per year a. Covan has 8 million shares outstanding, $4 million in excess cash, and no debt. If its cost of capital is 11%, what should its stock price be? b. Covan reinvests all its FCF. If you plan to sell Covan at the beginning of year two, what should you expect its price to be? (Note: it has no plans to add debt or change its cash holdings). c. Assume you bought Covan stock at the beginning of year one. What is your return expected to be from holding Covan stock until the beginning of year two? a. Covan has 8 million shares outstanding, $4 million in excess cash, and no debt. If its cost of capital is 11%, what should its stock price be? The stock price should be $5.57. (Round to the nearest cent.) b. Covan reinvests all its FCF. If you plan to sell Covan at the beginning of year two, what should you expect its price to be? (Note: it has no plans to add debt or change its cash holdings). If you plan to sell Covan at the beginning of year two, its price should be $(Round to the nearest cent.) c. Assume you bought Covan stock at the beginning of year one. What is your return expected to be from holding Covan stock until the beginning of year two? Your expected return from holding Covan stock until the beginning of year two is%. (Round to one decimal place.) Heavy Metal Corporation is expected to generate the following free cash flows over the next five years. 1 2 3 4 5 Year FCF ($ million) 54.2 66.6 79.2 74.3 80.1 Thereafter, the free cash flows are expected to grow at the industry average of 3.7% per year. Use the discounted free cash flow model and a WACC of 14.2% to estimate the following. a. The enterprise value of Heavy Metal b. Heavy Metal's share price if the company has no excess cash, debt of $319 million, and 44 million shares outstanding a. Estimate the enterprise value of Heavy Metal. The enterprise value will be $ million. (Round to two decimal places.) b. Estimate Heavy Metal's share price if the company has no excess cash, debt of $319 million, and 44 million shares outstanding. The stock price per share will be $ (Round to the nearest cent.)
