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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.

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 6DQ
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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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