Company has the following cash flow stream. CF1 = 402 CF2 = 602 CF3 = 988...

Company has the following cash flow stream.

CF1 = 402

CF2 = 602

CF3 = 988

Cash flow is expected to be constant after year 3, with a growth rate of 4%. The WACC is 10%. In addition, the company has 21 millions in cash, and 52 millions debt, with 17 millions shares outstanding. What is the stock price, P_{0 ,} toda

Expert Solution

Value of Operations = 402/(1.10) + 602/(1.10)² + 988/(1.10)³ + 988(1.04)/(0.10 - 0.04)(1.10)³

Value of Operations = $14,471.79

Stock Price = (14,471.79 - 21 - 52)/17

Stock Price = $846.99

jeff jeffy answered 2 years ago

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