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You are valuing a company with free cash flows expected to grow at a stable 2.0%...

You are valuing a company with free cash flows expected to grow at a stable 2.0% rate in perpetuity. Analysts are forecasting free cash flows of $36 million for next year (FCFF1). The company has $33 million of debt and $6 million of cash. Cost of capital is 12.6%. There are 15 million shares outstanding. How much is each share worth according to your valuation? Round to one decimal place.

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Answer #1

PV free cash flows 340 =36/(12.6%-2%) Add: $ Cash Less: Debt Ś $ Value of common equity = Number of shares issued 346 15 Stoc

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