Hello,
For question 1, we will use normal DCF model
For question 2 as well we ill use DCF model with 2 changes
1) Increasing Cash balance by FCF of year 1 = 4+11=15
2) Adjusting the discount rates accordingly
For question 3, we need to calculated returns based on fair value calculated in Q1 and Q2
Please see below snapshot for solution. Answer are highlighted in yellow
Covan, Inc. is expected to have the following free cash flow: Year 1 2 FCF11_13_ 14...
Covan, Inc. is expected to have the following free cash flow: Year FCF 1 12 2 14 15 Grow by 5% per year a. Covan has 7 million shares outstanding, $2 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what...
Covan, Inc. is expected to have the following free cash flow: Year FCF 10 12 13 14 Grow by 4% per year a. Covan has 7 million shares outstanding. S2 million in excess cash, and it has no debt if its cost of capital is 10%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is...
Covan, Inc is expected to have the following free cash flow Year FCF 13 14 15 Grow by 5% per year a. C van has 8 million shares outstand $2 million in excess cash, and it has no debt. If its cost of capital is 10% what should be its stock price? b. Covan reinvests all its FCF and has no plans to add debt or change its cash holdings (it does not invest its cash holdings) If you plan...
Covan, Inc. is expected to have the following free cash flow: Year 1 2 3 4 FCF 10 12 13 14 Grow by 4 % per year a. Covan has 7 million shares outstanding, $2 million in excess cash, and it has no debt. If its cost of capital is 12%, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning...
Covan, Inc. is expected to have the following free cash flow: Year 1 2 3 4 FCF 10 12 13 14 Grow by 4 % per year a. Covan has 6 million shares outstanding, $4 million in excess cash, and it has no debt. If its cost of capital is 11 %, what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the...
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 $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.)
Scampini Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 8% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 15%. If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. Each share of common stock is worth $ , according to...
Scampini Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 15%. If Scampini has 60 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. Each share of common stock is worth $ , according to the...