Question
You have been assigned the task of using the corporate valuation, or free cash flow, model to estimate a company's intrinsic value. The firm's WACC
You have been assigned the task of using the corporate valuation, or free cash flow, model to estimate a company's intrinsic value. The firm's WACC is 15%. The next three years of free cash flow are forecasted to be $150 million, $275 million, and $325 million, respectively. After the third year, the free cash flows are expected to grow at a constant rate of 3% a year, thereafter. If the company has $250 million in investments they receive, $600 million of long-term debt and $40 million in short term debt, $160 million of preferred stock, and it has 65 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?
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