Question
Santa Com generated 10m in free cash flow this year. Their cash flow is expected to decline by 5% in year 1 and 2,
Santa Com generated 10m in free cash flow this year. Their cash flow is expected to decline by 5% in year 1 and 2, and then increase by 10% in year 3 &4. They are expected to reach a constant growth of 5% thereafter. The company is financed 30% by debt and 70% by equity (100,000 common stocks). If their WACC is 7%, how much would an investor be willing to pay for a stock?
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
14th Edition
0357516664, 978-0357516669
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