Question: please answer this correctly Covan, Inc. is expected to have the following free cash flow: a. Covan has 6 million shares outstanding. $3 million in
Covan, Inc. is expected to have the following free cash flow: a. Covan has 6 million shares outstanding. $3 million in excess cash, and it has no debt. If its cost of capital is 12%, 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? Data table what should be its stock price? (Click on the following icon in order to copy its contents into a spreadsheet.)
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