Question: Based on the equity free cash flow model, what is the price per share for the common stock? Year 1 Revenue 630 Fixed costs 120
Based on the equity free cash flow model, what is the price per share for the common stock? Year 1 Revenue 630 Fixed costs 120 Variable costs 200 Add. investment in NWC 10 Add. investment in operating long-term assets 70 Depreciation 60 Interest expenses 35 Newly issued debt 25 Principle repayments Market value of the firm: Price per share Number of shares Market value Short-term debt: Market Value 200 Long-term debt: Mark Value 600 Common Stock: Price per share 18, Number of shares 100, Market Value 1800 Total: Market Value 2600 Cost of equity (Rs) 0.14 Tax rate 0.4 Growth rate per year from year 1 through year 5 0.12 Growth rate after year 5 0.05
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