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
Related questions
Question
7) see picture
Transcribed Image Text:Scampini Technologies is expected to generate $100 million in free cash flow next year, and FCF is expected to grow at a constant rate of 7% per year indefinitely.
Scampini has no debt, preferred stock, or non-operating assets, and its WACC is 11%. If Scampini has 40 million shares of stock outstanding, what is the stock's
value
share? Do not round intermediate calculations. Round your answer to the nearest cent.
per
Each share of common stock is worth $
according to the corporate valuation model.
Expert Solution
Step 1
Formula to calculate stock value per share:
Market value/No of outstanding shares
Formula for Market value:
FCF/WACC - g
Where FCF is the free cash flow & g is the growth rate
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