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Question 4: Find the current value of share using the below variables and free cash flows. Year Free cash flows (in million) 1 $5.4 234 $10.7 $22.0 $39.6 5 $80.0 6 $97.1 7 $110.3 868 $134.5 9 $145.2 10 $151.8 The cash flows grow at a rate of 7% with a required return of 9%. The market value of debt is $1,100 million, preferred stock is $200 million. The total common stock outstanding is 20 million shares.

Question 4: Find the current value of share using the below variables and free cash flows. Year Free cash flows (in million) 1 $5.4 234 $10.7 $22.0 $39.6 5 $80.0 6 $97.1 7 $110.3 868 $134.5 9 $145.2 10 $151.8 The cash flows grow at a rate of 7% with a required return of 9%. The market value of debt is $1,100 million, preferred stock is $200 million. The total common stock outstanding is 20 million shares.

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
Problem 1PS
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Question 4: Find the current value of share using the below variables and free cash flows. Year Free cash flows (in million) 1 $5.4 234 $10.7 $22.0 $39.6 5 $80.0 6 $97.1 7 $110.3 868 $134.5 9 $145.2 10 $151.8 The cash flows grow at a rate of 7% with a required return of 9%. The market value of debt is $1,100 million, preferred stock is $200 million. The total common stock outstanding is 20 million shares.
Transcribed Image Text:Question 4: Find the current value of share using the below variables and free cash flows. Year Free cash flows (in million) 1 $5.4 234 $10.7 $22.0 $39.6 5 $80.0 6 $97.1 7 $110.3 868 $134.5 9 $145.2 10 $151.8 The cash flows grow at a rate of 7% with a required return of 9%. The market value of debt is $1,100 million, preferred stock is $200 million. The total common stock outstanding is 20 million shares.
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