A company is projected to have a free cash flow of $346 million next year, growing...

A company is projected to have a free cash flow of $346 million next year, growing at a 6% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.3% in perpetuity. The company's cost of capital is 9.4%. The company owes $92 million to lenders and has $16 million in cash. If it has 196 million shares outstanding, what is your estimate for its stock price? Round to one decimal place. (e.g., $4.32 = 4.3)

Expert Solution

	0	1	2	3	4
FCF		$ 346.00	$ 366.76	$ 388.77	$ 397.71
PVIF at 9.4%		0.91408	0.83554	0.76374
PV at 9.4%		$ 316.27	$ 306.44	$ 296.92
Sum of PV of FCF - t1 to t3	$ 919.63
Continuing value of FCF = 397.71/(0.094-0.023) =				$ 5,601.55
PV of continuing value = 5601.55*0.76374 =	$ 4,278.13
Value of operations	$ 5,197.76
Add: Cash	$ 16.00
Less: Borrowings	$ 92.00
Value of equity	$ 5,121.76
Number of shares	196.00
Estimate of stock price	$ 26.13

jeff jeffy answered 1 year ago

A company is projected to have a free cash flow of $429 million next year, growing...

A company is projected to have a free cash flow of $429 million next year, growing at a 4.7% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.6%. The company's cost of capital is 10.8%. The company owes $114 million to lenders and has $10 million in cash. If it has 264 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.

company is projected to have a free cash flow of $314 million next year, growing at...

company is projected to have a free cash flow of $314 million next year, growing at a 4.9% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.3%. The company's cost of capital is 10.6%. The company owes $107 million to lenders and has $11 million in cash. If it has 257 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.

A company is projected to have a free cash flow of $357 million next year, growing...

A company is projected to have a free cash flow of $357 million next year, growing at a 4.4% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.4%. The company's cost of capital is 9.3%. The company owes $129 million to lenders and has $8 million in cash. If it has 279 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.

A company is projected to have a free cash flow of $389 million next year, growing...

A company is projected to have a free cash flow of $389 million next year, growing at a 5% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.5% in perpetuity. The company's cost of capital is 8.3%. The company owes $106 million to lenders and has $7 million in cash. If it has 239 million shares outstanding, what is your estimate for its stock price? Round to one...

Company is projected to generate free cash flows of $179 million per year for the next...

Company is projected to generate free cash flows of $179 million per year for the next 3 years (FCFF1, FCFF2 and FCFF3). Thereafter, the cash flows are expected to grow at a 1.8% rate in perpetuity. The company's cost of capital is 10.9%. What is your estimate for its enterprise value? Answer in millions, rounded to one decimal place

A company is projected to generate free cash flows of $178 million next year and $191...

A company is projected to generate free cash flows of $178 million next year and $191 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company's cost of capital is 13.6%. It has $107 million worth of debt and $77 million of cash. There are 21 million shares outstanding. If the exit multiple for this company's free cash flows (EV/FCFF) is 7.7, what's your estimate of the company's stock...

A company is projected to generate free cash flows of $171 million next year and $196...

A company is projected to generate free cash flows of $171 million next year and $196 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company’s cost of capital is 12.3%. It has $129 million worth of debt and $69 million of cash. There are 23 million shares outstanding. If the exit multiple for this company’s free cash flows (EV/FCFF) is 6.9, what’s your estimate of the company’s stock...

A firm is expected to have free cash flow of $881 million next year. The firm...

A firm is expected to have free cash flow of $881 million next year. The firm has $1 billion of outstanding debt and no preferred stock. The WACC is 7% and FCF is expected to grow at 1% indefinitely. If the firm has 91 million shares outstanding, what is the expected value of the firm's stock price? If a portfolio holds three stocks in equal amounts, and the betas of the three stocks are 0.8, 1.4, and 1.4, what is...

A firm is expected to have free cash flow of $782 million next year. The firm...

A firm is expected to have free cash flow of $782 million next year. The firm has $1 billion of outstanding debt and no preferred stock. The WACC is 10% and FCF is expected to grow at 1% indefinitely. If the firm has 104 million shares outstanding, what is the expected value of the firm's stock price?

A company’s free cash flow next year is expected to be -$11.2 million, $3.6 million the...

A company’s free cash flow next year is expected to be -$11.2 million, $3.6 million the following year, and $6.2 million in the third year. Thereafter, the free cash flow is expected to grow forever at a rate of 4.8% per year. The company’s weighted average cost of capital is 11.1% per year and the market value of its debt is $35.2 million. If the company has four million shares of common stock outstanding, what is the value per share?...

Question