You are considering buying common stock in Grow On, Inc. You have calculated that the firm's free

Question:

You are considering buying common stock in Grow On, Inc. You have calculated that the firm's free cash flow was $5.20 million last year. You project that free cash flow will grow at a rate of 18.0% per year for the next three years, and then 7.0% per year thereafter. The firm currently has outstanding debt and preferred stock with a total market value of $39.43 million. The firm has 2.31 million shares of common stock outstanding. If the firm's cost of capital is 14.0%, what is the most you should pay per share for the stock now?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...