Company has the following cash flow stream. CF1 = 486 CF2 = 687 CF3 = 840 CF4 = 938 Cash flow is expected to be constant after year 4, with a growth rate of 4%. The WACC is 10%. In addition, company has 32 millions debt, with 51 millions shares outstanding. What is the stock price, P0 , today?

Company has the following cash flow stream. CF1 = 486 CF2 = 687 CF3 = 840 CF4 = 938 Cash flow is expected to be constant after year 4, with a growth rate of 4%. The WACC is 10%. In addition, company has 32 millions debt, with 51 millions shares outstanding. What is the stock price, P0 , today?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter17: Dynamic Capital Structures And Corporate Valuation

Section: Chapter Questions

Problem 5P

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Question

Company has the following cash flow stream.

CF1 = 486

CF2 = 687

CF3 = 840

CF4 = 938

Cash flow is expected to be constant after year 4, with a growth rate of 4%. The WACC is 10%. In addition, company has 32 millions debt, with 51 millions shares outstanding. What is the stock price, P0 , today?

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