Question: Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of

Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indefinitely. Smith has no debt or preferred stock, and its WACC is 10%. If Smith has 50 million shares of stock outstanding, what is the stock’s value per share?

Step by Step Solution

★★★★★

3.57 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The firms free cash flow is expected to grow at a constant rate hence we ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

43-B-A-I-A (467).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

A tire 0.500 m in radius rotates at a constant rate of 200 rev/min, find the speed and acceleration of a small stone lodged in the tread of the tire (on its outer edge).

A car accelerates from rest at a constant rate of 2.0 m/s2 for 5.0 s. (a) What is the speed of the car at the end of that time? (b) How far does the car travel in this time?

A rotating flywheel slows down at a constant rate due to friction in its bearings. After 1 min, its angular velocity has diminished to 0.80 of its initial value . At the end of the third minute, what...

How far away is the horizon date? b. What is the firm's horizon, or continuing, value? c. What is the firm's intrinsic value today, P_0? CORPORATE VALUATION Smith Technologies is expected to generate...

Also need help with these. its greatly appriecated!!! Click here to read the eBook: Constant Growth Stocks CONSTANT GROWTH VALUATION Holtzman Clothiers's stock currently sells for $22. a share. It...

Chapter 9 Fletcher Company's current stock price is $36.00, its last dividend was $2.40, and its required rate of return is 12%. If dividends are expected to grow at a constant rate, g, in the future...

Scampini Technologies is expected to generate $ 1 5 0 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6 % per year indefinitely. Scampini has no debt or...

These three questions have been giving me trouble. Scampini Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per...

CORPORATE VALUATION Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indefinitely. Smith has no debt...

28. Corporate valuation Smith Technologies is expected to generate $150 million in free cash flow next year, and FCF is expected to grow at a constant rate of 5% per year indefinitely. Smith has no...

Glenna is retired from Cherry Hills Corporation. When she retired at age 68, she decided to take her pension as a lump-sum distribution and roll over the proceeds tax-free into her IRA. On January 1,...

Show that the hypothesis that the sequence X := (xn) is decreasing in Dirichlet's Test 9.3.4 can be replaced by the hypothesis that is convergent. r=1

The process lead time is the amount of time it takes for a hiring request to flow through the whole process? True False

Different types of costing systems are appropriate in specific circumstances" Discuss the above statement, identifying the type of costing system that would be appropriate in each case, with reasons:...

1. Minimize estate taxes. 2. Fund college education for the five grandchildren. 3. Set up a special needs trust for Ivan's future needs. 4. Ensure that the vacation home is a permanent family home...

Maggie bought a house which was quite a dump in 1989 for $75,000. She fixed it up with paint and wallpaper but in 1996 she did a major renovation which cost $50,000. In 1993, she bought a dump of a...

A typical HeNe laboratory laser produces light of wavelength 632.8 nm. The laser beam carries a power of 0.35 mW and strikes a target perpendicular to the beam. How many photons per second strike the...

To ensure safety and efficacy, the Food and Drug Administration regulates the medicines that pharmacies are allowed to sell in the United States. Sometimes this means a company must test a drug for...

DLeon purchases materials on 30-day terms, meaning that it is supposed to pay for purchases within 30 days of receipt. Judging from its 2008 balance sheet, do you think that DLeon pays suppliers on...

Suppose DLeons sales manager told the sales staff to start offering 60-day credit terms rather than the 30-day terms now being offered. DLeons competitors react by offering similar terms, so sales...

If DLeon starts depreciating fixed assets over 7 years rather than 10 years, would that affect (1) the physical stock of assets, (2) the balance sheet account for fixed assets, (3) the companys...

You own the following portfolio of stocks. What is the portfolio weight of stock C? 64.26 percent 58.02 percent 20.30 percent 35.74 percent 37.72 percent

5. Assume the par value of the bond is $1,000. The Pioneer Petroleum Corporation has a bond outstanding with an $85 annual interest payment, a market price of $800, and a maturity date in five years....

Question 1: Setup [4 marks] Create an active Processing function that draws a spaceship on a dark background. The spaceship is a simple triangle shape that can be turned to point in any direction....