Question
You are evaluating a firm with projected free cash flows given below. You expect that cash flows will grow by 4% per year after the
You are evaluating a firm with projected free cash flows given below. You expect that cash flows will grow by 4% per year after the forecast period. The appropriate discount rate is 12%. The firm has a net income of $34 million. Debt of $20 million. The firm has 10 million shares outstanding. You have found a comparable firm with a P/E multiple of 11.5 times.
What is the price per share of the firm using FCF discounted by weighted average cost of capital and what is the value using comparable multiples?
FCF: Year 1 = 25M; Year 2 = 30M; Year 3 = 32M; Year 4 = 40M
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started