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Huxley Building Supplies' last free cash flow was $1.75 million. Its free cash flow growth rate is expected to be 25% per year for the next 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of capital is 12%. Huxley has $5 million in non-operating assets, $5 million in debt, $2 million in preferred stock, and has 1 million shares outstanding. What is the best estimate of the current intrinsic value of common stock? $44.92 $40.64 $42.80 $41.71 $39.58

Huxley Building Supplies' last free cash flow was $1.75 million. Its free cash flow growth rate is expected to be 25% per year for the next 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of capital is 12%. Huxley has $5 million in non-operating assets, $5 million in debt, $2 million in preferred stock, and has 1 million shares outstanding. What is the best estimate of the current intrinsic value of common stock? $44.92 $40.64 $42.80 $41.71 $39.58

Essentials Of Investments
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
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Huxley Building Supplies' last free cash flow was $1.75 million. Its free cash flow growth rate is expected to be 25% per year for the next 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of capital is 12%. Huxley has $5 million in non-operating assets, $5 million in debt, $2 million in preferred stock, and has 1 million shares outstanding. What is the best estimate of the current intrinsic value of common stock? $44.92 $40.64 $42.80 $41.71 $39.58
Transcribed Image Text:Huxley Building Supplies' last free cash flow was $1.75 million. Its free cash flow growth rate is expected to be 25% per year for the next 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of capital is 12%. Huxley has $5 million in non-operating assets, $5 million in debt, $2 million in preferred stock, and has 1 million shares outstanding. What is the best estimate of the current intrinsic value of common stock? $44.92 $40.64 $42.80 $41.71 $39.58
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