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You are tasked with estimating the value of a stock. Specifically, estimate the common stock's per - share value using a free cash flow model.
You are tasked with estimating the value of a stock. Specifically, estimate the common stock's pershare value using a free cash flow model. Use the following information to perform your computation:
Going forward, you expect free cash flows to grow at a constant rate of indefinitely there is no nonconstant growth in the beginning which means that you can use the constant growth model to value the firm.
Current year EBIT is $
Current year depreciation expense is $ Their tax rate is
Current year capital expenditures are $
They currently have $ in net debt debt minus cash
The change in net working capital is $
You calculate the discount rate to be
The company has common shares outstanding.
If this stock is currently trading at $ per share, would you recommend buying it based on the model? Provide a brief explanation for your recommendation.
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