There are many ways to value an asset. Valuation is a science, but it is also an art. Each method may not provide identical answers, and they can sometimes be far off.

A DCF model that incorporates using multiples and free cash flow is shown on slides $38-42$ for Tesla. Using a similar approach to slides $38-40,$ value a stock with the following information.

Assume:

Year FCFE $($$$)$

$01\mathrm{.}00$

$11\mathrm{.}10$

$21\mathrm{.}20$

$31\mathrm{.}30$

$41\mathrm{.}40$

$51\mathrm{.}50$

$61\mathrm{.}60$

$71\mathrm{.}70$

Assume investment in capital $($net fixed assets and net operating working capital$)$ in time $7$ is $$0\mathrm{.}50$ per share.

You must remember that FCFE $=$ net income $-$ investment in capital

Assume the P$/$E in time $7$ is $20$

Assume the cost of equity $($the discount rate or r$)$ is $12\%.$

What is this stock worth?Chapter $7$: DCF with a Terminal P$/$E

There are many ways to value an asset. Valuation is a science, but it is also an art.

Each method may not provide identical answers, and they can sometimes be far

off.

A DCF model that incorporates using multiples and free cash flow is shown on

slides $38-42$ for Tesla. Using a similar approach to slides $38-40,$ value a stock

with the following information.

Assume:

Assume investment in capital $($net fixed assets and net operating working

capital$)$ in time $7$ is $$0\mathrm{.}50$ per share.

You must remember that FCFE $=$ net income $-$ investment in capital

Assume the P$/$E in time $7$ is $20$

Assume the cost of equity $($the discount rate or $r)$ is $12\%.$

What is this stock worth?

Note: Enter your answer with two decimals and without the $ sign. That is$,$ if

your answer is $$50\mathrm{.}514$ then enter $$50\mathrm{.}51.$ Only round final answer and not

intermediate steps.