Portage Bay Enterprises has $2 million in excess cash, no debt, and is expected to have free

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Portage Bay Enterprises has $2 million in excess cash, no debt, and is expected to have free cash flow of $12 million next year. Its FCF is then expected to grow at a rate of 6% per year forever. If Portage Bay’s equity cost of capital is 11% and it has 7 million shares outstanding, what should be the price of Portage Bay stock?

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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