Gonzales Corportation generated free cash flow of $86 million this year.  For the next two years, the company's free flow is expected to grow at a rate of 10%.  After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year.  If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Gonzales Corportation generated free cash flow of $86 million this year.  For the next two years, the company's free flow is expected to grow at a rate of 10%.  After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year.  If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?

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