You are going to use free cash flow model to estimate Weeky Corporation's intrinsic value. The...

You are going to use free cash flow model to estimate Weeky Corporation's intrinsic value. The firm's WACC is 12%. The company will have the free cash flows (in millions) shown below. After Year 3, the FCFs are expected to grow at a constant rate of 5.00% a year in the future. The company has $160 million of long-term debt and preferred stock, and it has 40 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?

Year	1	2	3
Free cash flow	−$10.00	$35.00	$50.00

a. The time that the company's cash flow settle down to long term growth rate (horizon time) is year what?

b. The Company's Free cash flow at year 4 is ( ) million

c. The Firm Value at year 3 (Horizon Value) is ( ) million.

d. The Firm Value at time 0 is (. ) millions.

e. Then the firm's estimated instrinsic value per share of common stock at time 0 is $(. )

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 1 year ago

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