QUESTION 2 Consider a company that is forecasted to generate free cash flows of $24 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 7.5%. The company has $34 million in debt, $19 million of cash, and 22 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 15, how much is each share worth? Round to one decimal place.
QUESTION 2 Consider a company that is forecasted to generate free cash flows of $24 million next year and $29 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 7.5%. The company has $34 million in debt, $19 million of cash, and 22 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 15, how much is each share worth? Round to one decimal place.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...
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