Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 2 3 4 5 FCF ($ million) 54.8 69.2 78.8 73.8 82.1 After that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.3%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $313 million, and 45 million shares outstanding, estimate its share price.
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon in order to copy its contents into a spreadsheet.) Year 1 2 3 4 5 FCF ($ million) 54.8 69.2 78.8 73.8 82.1 After that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.3%: a. Estimate the enterprise value of Heavy Metal. b. If Heavy Metal has no excess cash, debt of $313 million, and 45 million shares outstanding, estimate its share price.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: (Click on the following icon
in order to copy its contents into a spreadsheet.)
|
Year
|
1
|
2
|
3
|
4
|
5
|
|
FCF ($ million)
|
54.8
|
69.2
|
78.8
|
73.8
|
82.1
|
After that, the free cash flows are expected to grow at the industry average of
free cash flow model and a weighted average cost of capital of
3.9%
per year. Using the discounted 13.3%:
a. Estimate the enterprise value of Heavy Metal.
b. If Heavy Metal has no excess cash, debt of
$313 million, and 45 million shares outstanding, estimate its share price.
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