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A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8% annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares outstanding. What's the value of each share? a. 63.3 b. 48.3 C. 42.0 d. 29.3 e. 38.4

A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8% annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares outstanding. What's the value of each share? a. 63.3 b. 48.3 C. 42.0 d. 29.3 e. 38.4

Intermediate Financial Management (MindTap Course List)
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
Section: Chapter Questions
Problem 17P: Value of Operations Kendra Enterprises has never paid a dividend. Free cash flow is projected to be...
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QUESTION 17 A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8% annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares outstanding. What's the value of each share? а. 63.3 O b. 48.3 O c. 42.0 O d. 29.3 О е. 38.4
Transcribed Image Text:QUESTION 17 A company is forecasted to generate free cash flows of $64 million for the next three years. After that, cash flows are projected to grow at a 2.8% annual rate in perpetuity. The company's cost of capital is 11.9%. The company has $61 million in debt, $6 million of cash, and 16 million shares outstanding. What's the value of each share? а. 63.3 O b. 48.3 O c. 42.0 O d. 29.3 О е. 38.4
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