Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Target Technologies is a gadget supplier for the automobile industry. The current free cash flow for Target Technologies is $7.6 million. The free cash flows

Target Technologies is a gadget supplier for the automobile industry. The current free cash flow for Target Technologies is $7.6 million. The free cash flows are expected to grow at 10 percent for the next five years before leveling off to 4 percent for the indefinite future. The company's cost of capital is 10 percent. Target Technologies currently has 2.2 million shares of stock outstanding and $35 million in debt outstanding. What is the maximum price per share an investor would pay for Target Technologies?

Step by Step Solution

3.41 Rating (148 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the maximum price per share an investor would pay for Target Technologies we first need to estimate the value of the companys equity and ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance Applications and Theory

Authors: Marcia Cornett, Troy Adair

3rd edition

1259252221, 007786168X, 9781259252228, 978-0077861681

More Books

Students also viewed these Finance questions

Question

Find the dy/dx for the following 3 2x+1.2x+1 (x +1)4 1- y=-

Answered: 1 week ago