Portage Bay Enterprises has $1 million in excess cash, no debt, and is expected to have free cash flow of $11 million next year. Its FCF is then expected to grow at a rate of 3% per year forever. If Portage Bay's equity cost of capital is 11% and it has 4 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.)
Value of Future CFs = FCFF1 / [ Cost of Capital - growth rate ]
= $ 11 M / [ 11% - 3% ]
= $ 11 M / 8%
= $ 137.5 M
Value of Firm = Value of Future CFs + Cash
= = $ 137.5 M +$ 1M
= $ 138.5M
Price of Stock = Value of firm / No. of shares
= $ 138.5 M / 4 M
= $ 34.625
= $ 34.63
Portage Bay Enterprises has $1 million in excess cash, no debt, and is expected to have...
Portage Bay Enterprises has $2 million in excess cash, no debt, and is expected to have free cash flow of $11 million next year. Its FCF is then expected to grow at a rate of 2% per year forever. If Portage Bay's equity cost of capital is 10% and it has 6 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 $1 million in excess cash, no debt, and is expected to have free cash flow of $10 million next year. Its FCF is then expected to grow at a rate of 2% per year forever. If Portage Bay's equity cost of capital is 13% and it has 6 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 $ 2 million in excess cash, no debt, and is expected to have free cash flow of $ 10 million next year. Its FCF is then expected to grow at a rate of 2 % per year forever. If Portage Bay's equity cost of capital is 13 % and it has 5 million shares outstanding, what should be the price of Portage Bay stock? The price of Portage Bay's stock is __ per share. (Round to...
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