A company's free cash flow projections in the next 2 years is given as below. Year1Year 2

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A company's free cash flow projections in the next 2 years is given as below.

Year1Year 2

-310M+200M

After year 2 the company expects a terminal growth rate of 3%

Company's weighted average cost of capital is 10%.

The company has 3000 shares issued. Its book value of net debt is 250M.

(a) Using the free cash flows model, calculate the value of each share of the company.

(b)How would your answer change if the second year cash flow was- 200 instead of 200?

Related Book For answer-question

Equity Asset Valuation

ISBN: 978-0470571439

2nd Edition

Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen

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Posted Date: May 10, 2024 06:44 AM

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A company's free cash flow projections in the next 2 years is given as below. Year1Year 2

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a To calculate the value of each share of the company using the free cash flows model we need to fol... View the full answer

Equity Asset Valuation

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