Gonzales Corportation generated free cash flow of $86 million this year. For the next two years, the company's free flow is expected to grow at a rate of 10%. After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year. If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?
Gonzales Corportation generated free cash flow of $86 million this year. For the next two years, the company's free flow is expected to grow at a rate of 10%. After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year. If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?
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 6MC
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