A company is forecasted to generate free cash flows of $25 million next year and $27 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 8.1%. The company has $31 million in debt, $16 million of cash, and 16 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 20, what's your estimate of the company's stock price? O a. 30.8 O b. 26.8 O c. 14.9 O d. 10.6 Oe. 18.0

A company is forecasted to generate free cash flows of $25 million next year and $27 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 8.1%. The company has $31 million in debt, $16 million of cash, and 16 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 20, what's your estimate of the company's stock price? O a. 30.8 O b. 26.8 O c. 14.9 O d. 10.6 Oe. 18.0

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 29P

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