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Suppose a firm has a EBIT of $450, Depreciation of $65, taxes of $50, change in NWC of $35, and net capital expenditures of $75.

Suppose a firm has a EBIT of $450, Depreciation of $65, taxes of $50, change in NWC of $35, and net capital expenditures of $75. Its FCF are expected to grow constantly indefinitely. The firm has a retention rate of 60%, an ROE of 6.667%, and a WACC of 15%.

What is the value of the firm?

Assuming the firm's market value of debt is $1,350 and the firm has 98 shares outstanding, what is should the firm's stock price be? Should you buy the stock if it currently sells for $15 per stock?

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