I can not figure out part C. Thanks
WACC= | 16.00% | ||||||
Year | Previous year FCF | FCF growth rate | FCF current year | Horizon value | Total Value | Discount factor | Discounted value |
1 | 0 | 0.00% | -20 | -20 | 1.16 | -17.2414 | |
2 | -20 | 0.00% | 30 | 30 | 1.3456 | 22.29489 | |
3 | 30 | 0.00% | 40 | 540 | 580 | 1.560896 | 371.58145 |
Long term growth rate (given)= | 8.00% | Value of Enterprise = | Sum of discounted value = | 376.63 | |||
Where | |||||||
Total value = FCF + horizon value (only for last year) | |||||||
Horizon value = FCF current year 3 *(1+long term growth rate)/( WACC-long term growth rate) | |||||||
Discount factor=(1+ WACC)^corresponding period | |||||||
Discounted value=total value/discount factor |
c
Enterprise value = Equity value+ MV of debt |
- Cash & Cash Equivalents |
376.63 = Equity value+100-10 |
Equity value = 286.63 |
share price = equity value/number of shares |
share price = 286.63/10 |
share price = 28.66 |
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