Covan, Inc. is expected to have the following free cash flow: Year 1 2 3 4 FCF Grow by per year a. Covan has million shares outstanding, $ million in excess cash, and it has no debt. If its cost of capital is , what should be its stock price? b. Covan adds its FCF to cash, and has no plans to add debt. If you plan to sell Covan at the beginning of year 2, what is its expected price? c. Assume you bought Covan stock at the beginning of year 1. What is your expected return from holding Covan stock until year 2?

Answer rating: 100% (QA)

Sol V 0 12 112 14112 2 15112 3 16112 4 1112 4 16105 012 005 194... View the full answer