Question
The current price of a company is $55.00, the company is expected to have the following free cash flows below. The firm has a WACC
The current price of a company is $55.00, the company is expected to have the following free cash flows below. The firm has a WACC of 8%. The sustainable growth rate for the firm is 1%. Is the company overvalued or undervalued, and if the current price were to converge to the valuation price, what would be your return?
| Cash Flows | $4.25 | $4.25 | $4.50 |
|---|---|---|---|
| Time Period | 1 | 2 | 3 |
A. Over-Valued, -14%
B. Over-Valued, -41.7%
C. Under-Valued, 41.7%
D. Under-Valued, 14%
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Wealth Inequality Asset Redistribution And Risk Sharing Islamic Finance
Authors: Tarik Akin , Abbas Mirakhor
1st Edition
3110583739, 3110583887, 9783110583885
