FCFE1 18B. FCFF Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%. The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%. What is the value of this stock if there are 500,000 outstanding shares? 3 4 5 $1.0000 g Yr 2-3 years 25.00% g Yr 4 year 10.00% g Year 5+ 3.00% k 12.50% PVFCFE # of shares 500,000 Stock Price Kohelin - 1.0
FCFE1 18B. FCFF Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%. The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%. What is the value of this stock if there are 500,000 outstanding shares? 3 4 5 $1.0000 g Yr 2-3 years 25.00% g Yr 4 year 10.00% g Year 5+ 3.00% k 12.50% PVFCFE # of shares 500,000 Stock Price Kohelin - 1.0
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 2P
Related questions
Question
![FCFE1
18B.
FCFF
Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%.
The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%.
What is the value of this stock if there are 500,000 outstanding shares?
3
4
5
$1.0000
g Yr 2-3 years
25.00%
g Yr 4 year
10.00%
g Year 5+
3.00%
k
12.50%
PVFCFE
# of shares
500,000
Stock Price
Kohelin
- 1.0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb93e99bd-8db0-4da1-95df-0e30107a3baf%2F42e0eaac-0e62-4702-9a0f-c6f4640d4f70%2Fnmwrvpe_processed.jpeg&w=3840&q=75)
Transcribed Image Text:FCFE1
18B.
FCFF
Suppose FCFE = $1.0 million in year 1. The growth rate for Years 2 and 3 is 25%. Year 4 is 10%.
The growth rate is expected to normalize to 3% afterwards. If the required rate of return is 12.5%.
What is the value of this stock if there are 500,000 outstanding shares?
3
4
5
$1.0000
g Yr 2-3 years
25.00%
g Yr 4 year
10.00%
g Year 5+
3.00%
k
12.50%
PVFCFE
# of shares
500,000
Stock Price
Kohelin
- 1.0
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