Year Free Cash Flow 1 $22 million 2 3 4 5 $26 million $29 million $30 million $32 million General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 4% per year. If the weighted average cost of capital is 8% and General Industries has cash of $20 million, debt of $45 million, and 80 million shares outstanding, what is General Industries' expected current share price? A. $12.2 B. $8.54 C. $8.13 D. $9.76
Year Free Cash Flow 1 $22 million 2 3 4 5 $26 million $29 million $30 million $32 million General Industries is expected to generate the above free cash flows over the next five years, after which free cash flows are expected to grow at a rate of 4% per year. If the weighted average cost of capital is 8% and General Industries has cash of $20 million, debt of $45 million, and 80 million shares outstanding, what is General Industries' expected current share price? A. $12.2 B. $8.54 C. $8.13 D. $9.76
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
Related questions
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mni.9
Transcribed Image Text:Year
Free Cash Flow
1
$22 million
2
3
4
5
$26 million
$29 million
$30 million
$32 million
General Industries is expected to generate the above free cash flows over the next five years, after which free cash
flows are expected to grow at a rate of 4% per year. If the weighted average cost of capital is 8% and General
Industries has cash of $20 million, debt of $45 million, and 80 million shares outstanding, what is General Industries'
expected current share price?
A. $12.2
B. $8.54
C. $8.13
D. $9.76
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