A company is forecasted to generate free cash flows of $49 million for the next three years. After that, cash flows are projected to grow at a 2.4% annual rate in perpetuity. The company's cost of capital is 7.9%. The company has $42 million in debt, $6 million of cash, and 14 million shares outstanding. What's the value of each share? O a. 100.6 O b. 20.4 O c. 32.7 d. 78.7 e. 58.3

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
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A company is forecasted to generate free cash flows of $49 million for the next three years. After that, cash flows are projected to grow at a 2.4% annual
rate in perpetuity. The company's cost of capital is 7.9%. The company has $42 million in debt, $6 million of cash, and 14 million shares outstanding. What's
the value of each share?
O a. 100.6
O b. 20.4
O c. 32.7
O d. 78.7
O e. 58.3
Transcribed Image Text:A company is forecasted to generate free cash flows of $49 million for the next three years. After that, cash flows are projected to grow at a 2.4% annual rate in perpetuity. The company's cost of capital is 7.9%. The company has $42 million in debt, $6 million of cash, and 14 million shares outstanding. What's the value of each share? O a. 100.6 O b. 20.4 O c. 32.7 O d. 78.7 O e. 58.3
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