Question
The current price of a company is $55.00, the company is expected to have the following free cash flows below. Cash Flows $4.25 $4.25
The current price of a company is $55.00, the company is expected to have the following free cash flows below.
Cash Flows | $4.25 | $4.25 | $4.50 |
|---|---|---|---|
Time Period | 1 | 2 | 3 |
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?
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PVCash Flow 1 425 1 0081 394 PVCash Flow 2 425 1 0082 364 PVCash Flow 3 450 ...
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Precalculus
Authors: Jay Abramson
1st Edition
1938168348, 978-1938168345
