Phoenix Corp, faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made in 2019 are asfollows:(5 millions) 2020 2021 2022 2023Net income1.01.0InvestmentFree cash flow 02.0 3.2 3.711.0 1.2 1.41.0 2.0 2.3Present valuePhoenix's recovery will be complete by 2024, and there will be no further growth in net income or free cash flow (it will remainconstant at $2.6 million after 2024).20244.0a. Calculate the PV of free cash flow, assuming a cost of equity of 9%. (Do not round intermediate calculations. Enter your answer inmillions rounded to 2 decimal places.)Price per share1.42.6millionb. Assume that Phoenix has 12 million shares outstanding. What is the price per share? (Do not round intermediate calculations.Round your answer to 2 decimal places.)

The value of cash available to a corporation after covering the costs of doing business is measured…

a. Calculate the PV of free cash flow, assuming a cost of equity of 9%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million b. Assume that Phoenix has 12 million shares outstanding. What is the price per share? (Do not round intermediate calculations.

a. Calculate the PV of free cash flow, assuming a cost of equity of 9%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value million b. Assume that Phoenix has 12 million shares outstanding. What is the price per share? (Do not round intermediate calculations.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

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Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made in 2019 are as follows: ($ millions) Net income Investment Free cash flow 2020 1.0 1.0 0 2021 2022 2.5 4.2 1.5 1.7 1.0 2.5 2023 4.70 1.9 2.8 2024 5.0 1.9 3.1 Phoenix's recovery will be complete by 2024, and there will be no further growth in net income or free cash flow. a) Calculate the PV of free cash flow, assuming a cost of equity of 10%. b) Assume that Phoenix has 12 million shares outstanding. What is the price per share?
**Please solve using Excel and explain all the formulas**
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