QUESTION 2 Consider a company that is forecasted to generate free cash flows of $24 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 7.5%. The company has $34 million in debt, $19 million of cash, and 22 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 15, how much is each share worth? Round to one decimal place.
QUESTION 2 Consider a company that is forecasted to generate free cash flows of $24 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 7.5%. The company has $34 million in debt, $19 million of cash, and 22 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 15, how much is each share worth? Round to one decimal place.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...
Related questions
Question
![QUESTION 2
Consider a company that is forecasted to generate free cash flows of $24 million next year
and $29 million the year after. After that, cash flows are projected to grow at a stable rate
in perpetuity. The company's cost of capital is 7.5%. The company has $34 million in debt,
$19 million of cash, and 22 million shares outstanding. Using an exit multiple for the
company's free cash flows (EV/FCFF) of 15, how much is each share worth? Round to
one decimal place.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9ffb7c5a-e887-474f-96dd-c20572d246e1%2F68f7d723-7a1a-4048-b432-c065a025ba38%2Fs63u35_processed.png&w=3840&q=75)
Transcribed Image Text:QUESTION 2
Consider a company that is forecasted to generate free cash flows of $24 million next year
and $29 million the year after. After that, cash flows are projected to grow at a stable rate
in perpetuity. The company's cost of capital is 7.5%. The company has $34 million in debt,
$19 million of cash, and 22 million shares outstanding. Using an exit multiple for the
company's free cash flows (EV/FCFF) of 15, how much is each share worth? Round to
one decimal place.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
![Financial Reporting, Financial Statement Analysis…](https://www.bartleby.com/isbn_cover_images/9781285190907/9781285190907_smallCoverImage.gif)
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning