The present value of JECK Co.'s expected free cash flow is $106 million. If JECK has...
The present value of JECK Co.'s expected free cash flow is $106
million. If JECK has $27
million in debt, $6
million in cash, and 2.6
million shares outstanding, what is its share price?
Homework Answers
Enterprise value=Market capitalization + debt - cash
Expected free cash flow of $106 million refers to enterprise
value
Debt=$27 million
Cash =$6 million
Number of shares outstanding=2.6 million
106=(Share price)*(Number of shares outstanding) + 27-6
106=(Share price)*(2.6) + 21
106-21=(Share price)*(2.6)
85/2.6=Share price
Share price=32.69230769 or $32.69 (Rounded to 2 decimal places)
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