Conundrum Mining is expected to generate the above free cash flows over the next four years,...

Conundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 million shares outstanding, what is Conundrum's expected current share price?

Year	1	2	3	4
Free Cash Flow	$12 million	$18 million	$22 million	$26 million

	$16.16
	$16.25
	$10.84
	$17.15
	$13.72

Solutions

Expert Solution

Conundrum's expected current share price = $10.84 (third option)

Workings:

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Plane Industries is expected to generate the free cash flows over the next four years (listed...

Plane Industries is expected to generate the free cash flows over the next four years (listed below), after which they are expected to grow at a rate of 5% per year. Cash flows are in millions of dollars. If the weighted average cost of capital is 12% and Plane Industries has cash of $65 million, debt of $45 million, and 30 million shares outstanding, what is Plane company's expected current share price? Cash Flow by year year 1: $14 year...

UBTECH Robotics is expected to generate the following free cash flows over the next five years....

UBTECH Robotics is expected to generate the following free cash flows over the next five years. After which, the free cash flows are expected to grow at the industry average of 3% per year. Using the discounted free cash flow model and the weighted average cost of capital of 11% UBTECH Robotics FCF Forecast ($ Millions) Year 1999, 2000, 2001, 2002, 2003, 2004 FCF (Amount in Millions)$55, $45, $89, $102, $84, $87 a. Estimate the enterprise value (V0) of UBTECH...

Heavy Metal Corporation is expected to generate the following free cash flows over the next five...

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years. Year 1 2 3 4 5 FCF ($ million) 53.2 68.1 79.3 74.3 83.5 Thereafter, the free cash flows are expected to grow at the industry average of 4.4% per year. Use the discounted free cash flow model and a WACC of 13.8% to estimate the following. a. The enterprise value of Heavy Metal b. Heavy Metal's share price if the company has...

Itab Shop Concept AB is expected to generate the following free cash flows over the next...

Itab Shop Concept AB is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ million) 53 68 78 75 82 After year 5, the free cash flows are expected to grow at the industry average of 3.0% per year. Using the discounted free cash flow model and assuming a cost of capital of 9.5%, a. Estimate the enterprise value of Itab Shop Concept. Itab's enterprise value is $...

Heavy Metal Corporation is expected to generate the following free cash flows over the next five...

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ million) 51.7 66.4 76.7 76.5 82.4 Thereafter, the free cash flows are expected to grow at the industry average of 4.3 % per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.2 %: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no...

You expect ABC Corporation to generate the following free cash flows over the next five years:...

You expect ABC Corporation to generate the following free cash flows over the next five years: Year 1 2 3 4 5 FCF ($ millions) 75 84 96 111 120 Beginning with year six, you estimate that ABC's free cash flows will grow at 6% per year and that ABC's weighted average cost of capital is 15%. If ABC has $500 million of debt, $50 million of cash, and 14 million shares of stock outstanding, then what is the price...

A company is forecasted to generate free cash flows of $45million for the next three...

A company is forecasted to generate free cash flows of $45 million for the next three years. After that, cash flows are projected to grow at a 2.5% annual rate in perpetuity. The company's cost of capital is 12.3%. The company has $66 million in debt, $7 million of cash, and 13 million shares outstanding. What's the value of each share?

1. Mongolian coal mining company. The expected free cash during the next three years is listed...

1. Mongolian coal mining company. The expected free cash during the next three years is listed below, after which the free cash flow is expected to grow at a constant 7% rate. Its WACC is 11%. Yr. Cash Flow -2 3 5 What is its horizon value (or continuing value—when the cash flows begin to grow at a constant rate) What is the firm’s value today? Suppose Mogoin Gol has $10 of debt and 4 stocks outstanding, what is the current...

Ted Corporation expects to generate free-cash flows of $200,000 per year for the next five years....

Ted Corporation expects to generate free-cash flows of $200,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 4 percent per year forever. If the firm's weighted average cost of capital is 15 percent, the market value of the firm's debt is $500,000, and Ted has a half million shares of stock outstanding, what is the value of Ted stock? Select one: a. $1.32 b. $1.79 c....

A company is forecasted to generate free cash flows of $21million next year and $24...

A company is forecasted to generate free cash flows of $21 million next year and $24 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 8.1%. The company has $48 million in debt, $17 million of cash, and 28 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 14, what's your estimate of the company's stock price?a. 30.8b. 26.8c....

Subjects