Question

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 to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 27 a. Covan has 8 million shares outstanding S2 million in excess cash, and it has no debt lf its cost of capital is 10%, what should be its stock price? The stock price should be s(Round to the nearest cent ) b. Covan reinvests all its FCF and has no plans to add debt or change its cash holdings (t does not invest its cash holdings) If you plan to sell Covan at the beginning of year 2, what is its expected price? f you plan to sell Covan at the beginning of year 2,its price should be s(Round to the nearest cent ) c. Assume you bought Covan stock at the beginning of year 1 What is your expected return from holding Covan stock until year 2? Your expected return from holing Covan stock un the beginning of year 2 is % Round to one decir al place)