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Please solve Please use the following information for the next five questions. Reeve Company is a privately held company in a growing industry. The company
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Please use the following information for the next five questions. Reeve Company is a privately held company in a growing industry. The company is expected to produce free cash flows of $15 million in one year, \$20 million in two years, and $28 million in three years. After three years, free cash flow will grow at a rate of 3%. The company's balance sheet shows $80 million in accounts receivable, $60 million in inventory, and $100 million in short-term investments that are unrelated to operations. The balance sheet also shows $90 million in accounts payable, $80 million in notes payable, $100 million in long-term debt, $50 million in preferred stock, $180 million in retained earnings, and $800 million in total common equity. The company also paid $30 million interest expenses. Its WACC is 10% and it currently has 10 million shares of stock. Based on the corporate valuation model, what is the best estimate of the stock's price per share in millions? 1) $36.30 2) $18.16 3) $23.07 4) $17.43 5) $12.43Step by Step Solution
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