Chapter $7$: DCF with a Terminal P$/$E

There are many ways to value an asset. Valuation is a science, but it is also an art. Each

method may not provide identical answers, and they can sometimes be far off.

A DCF model that incorporates using multiples and free cash flow is shown on slides $38-42$

for Tesla. Using a similar approach to slides $38-40,$ value a stock with the following

information.

Assume:

Assume investment in capital $($net fixed assets and net operating working capital$)$ in time

$7$ is $$0\mathrm{.}50$ per share.

You must remember that FCFE $=$ net income $-$ investment in capital

Assume the P$/$E in time $7$ is $25$

Assume the cost of equity $($the discount rate or $r)$ is $12\%.$

What is this stock worth?

Note: Enter your answer with two decimals and without the $ sign. That is$,$ if your answer

is $$50\mathrm{.}514$ then enter $$50\mathrm{.}51.$ Only round final answer and not intermediate steps.

Hint: It will be fantastically useful to remember the homework problem; however, please

note that I may have changed some data from the homework problem.

Previously provided expert answers are incorrect