Question
Portage Bay Enterprises has $1 million in excess cash, no debt and is expected to have free cash flow of $10 million next year. Its
Portage Bay Enterprises has $1 million in excess cash, no debt and is expected to have free cash
flow of $10 million next year. Its FCF is then expected to grow at a rate of 3% per year forever.
If Portage Bays equity cost of capital is 11% and it has 5 million shares outstanding, what
should the price of Portage Bays stock be?
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Multinational Financial Management
Authors: Alan C Shapiro, Paul Hanouna
11th Edition
1119559901, 9781119559900
