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Potus company's free cash flow for this past year was $29 million. It expects its free cash flows to grow at 7% this year and
Potus company's free cash flow for this past year was $29 million. It expects its free cash flows to grow at 7% this year and all future years. Potus has a weighted average cost of capital of 16% and no debt, but preferred stock of $40 million. It has 20 million shares of common stock outstanding. Compute Potus's intrinsic value? and determine if the stock market price of $12/share is overvalued or undervalued?
a. $15.24; undervalued b. $15.24; overvalued c. $11.29; overvalued d. $11.29; undervalued e. $14.11; overvalued
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