Question
This year SAAS Limited had free cash flow of R21 million and a dividend payout ratio of 50%. The company expects to grow at 21%pa
This year SAAS Limited had free cash flow of R21 million and a dividend payout ratio
of 50%.
The company expects to grow at 21%pa for four years, then at GDP rate of 6% a
year.
The weighted average cost of capital is 14% a year.
Debt is 20% of enterprise value and the number of shares in issue is 4 million.
What is the share price?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the share price we need to estimate the future free cash flows to equity FCFE and discount them back to the present value using the weigh...
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Step: 2
Step: 3
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Fundamentals of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
1st canadian edition
978-0133400694
