Please answer the problem below and show the work For the year just concluded, Free Cash...

Please answer the problem below and show the work

For the year just concluded, Free Cash Flow to Equity (FCFE) is 100 million. FCFE grows at 10% annually for the next three years, and then is constant (grows at 0%) per year thereafter. The required rate of return on equity is 8% and the weighted average cost of capital is 7.5%. There are 40 million outstanding shares. What is the value per share? (Enter your answer to the nearest $0.01. Leave the $ sign off. In other words, if your answer is $55.55, enter 55.55 for your answer.)

Expert Solution

Year	Particulars	Cash flow	× discount 8%	Present value
1	FCF	110.00	0.92593	$ 101.85
2	FCF	121.00	0.85734	$ 103.74
3	FCF	133.10	0.79383	$ 105.66
3	Share price	1,663.75	0.79383	$ 1,320.74

Equity value				$ 1,631.99
/ Shares outstanding				40
Stock price				$ 40.80

Stock price is $40.80

jeff jeffy answered 1 year ago

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