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A firm's most recent free cash flow (FCFO) was $8.00 million. FCFS are expected to grow 6% a year. The firm's cost of equity is 11% and its WACC is 9%. The firm has $217.33 million in non-operating assets, $50 million in long term debt outstanding, $50 million in preferred stock, and 80 million shares outstanding. 1) What is the firm's expected value of operations today? 2) Estimate the intrinsic value of a share of the firm's stock. 3) What is the firm's expected value of operations 4 years from now?

A firm's most recent free cash flow (FCFO) was $8.00 million. FCFS are expected to grow 6% a year. The firm's cost of equity is 11% and its WACC is 9%. The firm has $217.33 million in non-operating assets, $50 million in long term debt outstanding, $50 million in preferred stock, and 80 million shares outstanding. 1) What is the firm's expected value of operations today? 2) Estimate the intrinsic value of a share of the firm's stock. 3) What is the firm's expected value of operations 4 years from now?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A firm's most recent free cash flow (FCFO) was $8.00 million. FCFS are expected to grow 6% a year. The firm's cost of equity is 11% and its WACC is 9%. The firm has $217.33 million in non-operating assets, $50 million in long term debt outstanding, $50 million in preferred stock, and 80 million shares outstanding. 1) What is the firm's expected value of operations today? 2) Estimate the intrinsic value of a share of the firm's stock. 3) What is the firm's expected value of operations 4 years from now?
Transcribed Image Text:A firm's most recent free cash flow (FCFO) was $8.00 million. FCFS are expected to grow 6% a year. The firm's cost of equity is 11% and its WACC is 9%. The firm has $217.33 million in non-operating assets, $50 million in long term debt outstanding, $50 million in preferred stock, and 80 million shares outstanding. 1) What is the firm's expected value of operations today? 2) Estimate the intrinsic value of a share of the firm's stock. 3) What is the firm's expected value of operations 4 years from now?
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