Hadley Inc. forecasts the year-end free cash flows (in millions) shown below.
Year | 1 | 2 | 3 | 4 | 5 |
FCF | -$22.66 | $37.2 | $43.3 | $53 | $55.6 |
The weighted average cost of capital is 10%, and the FCFs are
expected to continue growing at a 3% rate after Year 5. The firm
has $24 million of market-value debt, but it has no preferred stock
or any other outstanding claims. There are 18 million shares
outstanding. What is the value of the stock price today (Year 0)?
Round your answer to the nearest cent. Do not round intermediate
calculations.
$ per share
Value of the stock price today=(-22.66/1.1+37.2/1.1^2+43.3/1.1^3+53/1.1^4+55.6/1.1^5+55.6/1.1^5*1.03/(10%-3%)-24)/18=33.19
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3...
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Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.02 $38 $43.2 $51.7 $55.1 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $25 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 20 million shares outstanding. Also, the firm has zero non-operating assets. What...
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Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF $22.53 $37 $43.1 $52.4 $55 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $25 million of market value debt, but it has no preferred stock or any other outstanding claims. There are 18 million shares outstanding. What is the value...
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