Question
Vol, Inc. FCF's over the next 3 years are projected to be FCF1 = $5.00 Million, FCF2 = $5.00, FCF3 = $8.00 and free cash
free cash flows are projected to grow at 4% per year thereafter. Vol, Inc. also has the following information:
RBG, Inc. free cash flow for next year (FCF1) is expected to be $9 mill. Free cash flows are expected to grow at a rate of 6% forever. It also has the following financial information:
Market Value of RBG Debt = $120 mill
Short-term Investment = $ 25 mill
Book value of equity = $160 mill
Total Assets = $180 million
Shares outstanding = 2.5 million
Required return on stock = 12%
WACC = 10%
Calculate RBG\'s intrinstic equity valye per share.
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Analysis for Financial Management
Authors: Robert Higgins
11th edition
77861787, 978-0077861780
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