A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8% annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares outstanding. What's the value of each share? a. 63.3 b. 48.3 C. 42.0 d. 29.3 e. 38.4
A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8% annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares outstanding. What's the value of each share? a. 63.3 b. 48.3 C. 42.0 d. 29.3 e. 38.4
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:QUESTION 17
A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8%
annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares
outstanding. What's the value of each share?
а. 63.3
O b. 48.3
O c. 42.0
O d. 29.3
О е. 38.4
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