Question
Suppose you can estimate the free cash flow for Hoosier Electronics for the next 4 years. You predict that FCF will be $40, $50, $56,
Suppose you can estimate the free cash flow for Hoosier Electronics for the next 4 years. You predict that FCF will be $40, $50, $56, and $62 million for years 1,2,3, and 4. After the fourth year, you believe that FCFs will grow forever at 2.00%. The firms WACC is 10.00%. Currently, the book value of bonds is $200 million, the book value of notes payable is $64.00 million, and the book value of preferred stock is $35.00 million. The firm has $5 million in cash on hand. If the firm has 20 million shares of common stock outstanding, what is the equity value per share?
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