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Heavy Metal Corporation is expected to generate the following free cash flows over the next five​ years: Year                          1                2                3            4               5 ​ FCF​ ($ million)      51.1             69.2           78.8       76.4            80.1 After​ that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.5%​: Estimate the enterprise value of Heavy Metal. (Round to two decimal​places.) If Heavy Metal has no excess​ cash, debt of $285 million, and 43 million shares​ outstanding, estimate its share price. (Round to two decimal​places.)

Heavy Metal Corporation is expected to generate the following free cash flows over the next five​ years: Year                          1                2                3            4               5 ​ FCF​ ($ million)      51.1             69.2           78.8       76.4            80.1 After​ that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.5%​: Estimate the enterprise value of Heavy Metal. (Round to two decimal​places.) If Heavy Metal has no excess​ cash, debt of $285 million, and 43 million shares​ outstanding, estimate its share price. (Round to two decimal​places.)

Financial Management: Theory & Practice
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter21: Dynamic Capital Structures And Corporate Valuation
Section: Chapter Questions
Problem 9P
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Heavy Metal Corporation is expected to generate the following free cash flows over the next five​ years:

Year                          1                2                3            4               5

​ FCF​ ($ million)      51.1             69.2           78.8       76.4            80.1

After​ that, the free cash flows are expected to grow at the industry average of 3.9% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.5%​:

  1. Estimate the enterprise value of Heavy Metal. (Round to two decimal​places.)
  2. If Heavy Metal has no excess​ cash, debt of $285 million, and 43 million shares​ outstanding, estimate its share price. (Round to two decimal​places.)
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