Your company is evaluating a purchase of Skeksis Crystal Mining LLC. Skekis produced free cash flow of
Fantastic news! We've Found the answer you've been seeking!
Question:
Your company is evaluating a purchase of Skeksis Crystal Mining LLC. Skekis produced free cash flow of $7.3m last year, and this is expected to grow at 11% for the next five years before leveling off to a long term growth rate of 2%. Your company has a cost of capital of 10%, while Skeksis has a cost of capital of 13%. Skeksis has 3 million shares outstanding and $25m in debt. What would be the highest price you would pay per share of Skeksis’ stock? Please show ALL work don't compute on excel please!
Related Book For
Corporate Finance
ISBN: 9781260772388
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date: