Portage Bay Enterprises has no debt and is expected to have free cash flow of $10 million
Question:
Portage Bay Enterprises has no debt and is expected to have free cash flow of $10 million next year. It 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 5 million shares outstanding, what should the price of Portage Bay’s stock be?
Cost Of CapitalCost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...
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Plan Use Eq 918 to calculate the enterprise value and then Eq 919 to calcula...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-0321818171
2nd Canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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