Houda Motors has just announced results that show that the FCF for the past year is $35
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Question:
Houda Motors has just announced results that show that the FCF for the past year is $35 million. An experienced analyst believes that the growth rate of the FCF for the next year 10 years will be 25% per year and that after 10 years the growth rate will be 7% annually. Houda's WACC is 18%, and the company has 100 million shares outstanding.
a. Value the shares assuming that the FCFs occur at year-end. Houda has no debt and no excess cash reserves.
b. Suppose that the FCFs occur in mid-year. What would your answer be now?
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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