Question

Ankh-Sto Associates Co. is expected to generate a free cash flow (FCF) of $7,780.00 million this year (FCF₁ = $7,780.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Ankh-Sto Associates Co.’s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Ankh-Sto Associates Co.? (Note: Round all intermediate calculations to two decimal places.)

$174,882.41 million

$154,748.04 million

$128,956.70 million

$23,255.41 million

Ankh-Sto Associates Co.’s debt has a market value of $96,718 million, and Ankh-Sto Associates Co. has no preferred stock. If Ankh-Sto Associates Co. has 600 million shares of common stock outstanding, what is Ankh-Sto Associates Co.’s estimated intrinsic value per share of common stock? (Note: Round all intermediate calculations to two decimal places.)

$59.10

$52.73

$161.20

$53.73

Answer 1

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ANSWER 1: $128956.70

ANSWER 2 : $53.73