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A firm’s expected free cash flow is $25.2 million beginning in one year and continuing in...

A firm’s expected free cash flow is $25.2 million beginning in one year and continuing in perpetuity at a growth rate of 3.5% and a WACC of 15.5%. It has 85 million shares outstanding. It also has bonds with a total market value of $0.875 billion and holds $1,365 million in cash. What is its stock price according to the FCF Method? A) $7.90 B) $8.24 (ANSWER) C) $2.69 D) $2.47

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Answer #1

Value of company = fcfi DAcc - 3 25-2 155 - 035 210 stock Price i Value of company - deft + Cash No. of shares = 210 - 875 +

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