Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF...

Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 4% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 15%. If Scampini has 35 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent.

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Expert Solution

The valuation of Scampini Technologies can be calculated using the Present Value formula for growing perpetuity

Where FCF is the free cash flow next year = $50 million

g = growth rate = 4%

Weighted Average Cost of Capital, WACC = 15%

Valuation = $50m/11% = $454.545455 million

Number of Shares Outstanding = 35 million

Value per share = Valuation / Number of Shares Outstanding = $454.545455 million / 35 million

Value per share = $12.99

jeff jeffy answered 1 year ago

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