Grande Hotel Limited (GHL) is expected to generate free cash flows of $500,000 next year. Free cash

Question:

Grande Hotel Limited (GHL) is expected to generate free cash flows of $500,000 next year. will increase at an annual rate of $250,000 for Years 2 to 4 after which it will stabilize at $1.2 million per year from Years 5 to 10. GHL's is 5%. Long-term debt is $3 million. There are 1.5 million shares outstanding. The annual per share is $0.30.
Required:
Estimate the market price of the common shares for GHL using the:
(a) valuation method
(b) The method. Cost Of Capital
Cost 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... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... 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...