Question: Based on current projection, the firm will have a free cash flow of $ 1 0 0 million at the end of year 1 .

Based on current projection, the firm will have a free cash flow of $100 million at the end of year 1. Assuming the free cash flow will grow at a rate of 6% perpetually, what should be the value of stock? Given that the cost of equity is 10%, the weighted average cost of capital is 8%. The company has a cash balance of $500 million, with debt $1200 million and 500 million shares outstanding.

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