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.

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 2 years ago

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