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Portage Bay Enterprises has $4 million in excess cash, no debt, and is expected to have free cash flow of $14 million next year. Its FCF is then expected to grow at a rate of 6% per year forever. If Portage Bay's equity cost of capital is 11% and it has 8 million shares outstanding, what should be the price of Portage Bay stock? The price of Portage Bay's stock is $ per share. (Round to the nearest cent.)

Portage Bay Enterprises has $4 million in excess cash, no debt, and is expected to have free cash flow of $14 million next year. Its FCF is then expected to grow at a rate of 6% per year forever. If Portage Bay's equity cost of capital is 11% and it has 8 million shares outstanding, what should be the price of Portage Bay stock? The price of Portage Bay's stock is $ per share. (Round to the nearest cent.)

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 6MC
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Portage Bay Enterprises has $4 million in excess cash, no debt, and is expected to have free cash flow of $14 million next year. Its FCF is then expected to grow at a rate of 6% per year forever. If Portage Bay's equity cost of capital is 11% and it has 8 million shares outstanding, what should be the price of Portage Bay stock? The price of Portage Bay's stock is $ per share. (Round to the nearest cent.)
Transcribed Image Text:Portage Bay Enterprises has $4 million in excess cash, no debt, and is expected to have free cash flow of $14 million next year. Its FCF is then expected to grow at a rate of 6% per year forever. If Portage Bay's equity cost of capital is 11% and it has 8 million shares outstanding, what should be the price of Portage Bay stock? The price of Portage Bay's stock is $ per share. (Round to the nearest cent.)
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