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.

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 1 year ago

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