My corporation is a new firm that is planning to issue shares of common stock for the
Question:
My corporation is a new firm that is planning to issue shares of common stock for the very first time (an initial public offering) on January 1, 2020. You hav carefully analyzed its financial statements and have come up with the following projections:
Financial Projections:
Free Cash Flow in 2020: $7.5 million
Free Cash Flow in 2021: $9 million
Free Cash Flow in 2022: $15 million
Growth rate of return: 16% Market value of all debt on 1/1/20: $20 million Number of shares of common stock outstanding: 900,000 In order to determine the value of a share of stock, you have decided to apply the free cash flow approach to the firm’s financial data. If we assume that all cash flows come at the end of each year, what is the appropriate value of one share of my corporation at the beginning of 2020?
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780134486840
6th Edition
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura