Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are attempting to value DEF Industries using a discounted FCF approach however, the company does not curently produce any free cash flow. The company

You are attempting to value DEF Industries using a discounted FCF approach however, the company does not curently produce any free cash flow. The company forecasts that it will produce FCF in 3 years of $175 million and that is expects to grow that free cash flow at 4% for the foreseeable future (assume forever). If the company's cost of capital is 10%, what is the value of the company's stock today if they have net cash of $150 million and shares outstanding of 10 million? Round your answer to 2 decimal places and exclude the $ sign.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Carbon Markets Or Climate Finance?

Authors: Axel Michaelowa

1st Edition

0415743435, 978-0415743433

More Books

Students also viewed these Finance questions