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Suppose you invest in a company that has FCFs of $-5, $10, $20 million in the first 3 years, respectively. Thereafter, FCFs will grow at
- Suppose you invest in a company that has FCFs of $-5, $10, $20 million in the first 3 years, respectively. Thereafter, FCFs will grow at a constant rate of 6% each year. The firm has a weighted average cost of capital at 10%. This company has $40 million in debt. There are 10 million shares of common stock outstanding. How much should the stock sell for today?
Step: VC
Step: MV of common stock
Step: Stock price (value)
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