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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.

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Expert Solution

Every Value in Table is in millions except Stock price per share

Terminal value = FCF Yr 3 * (1 + Growth) / (WACC - Growth)

Terminal value = 345.53 * (1 + 0.023) / (0.106 - 0.023)

Terminal value = $4258.71 million

Thus Stock Price = $15.0 per share (From Image)

Please upvote if satisfied

jeff jeffy answered 2 years ago
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