Bonds and Stocks: showing all calculations

Super Company stock is selling for $200 per share which you believe is greatly undervalued. So you are considering making an offer for all of the Super stock. You have estimated Super's free cash flow for the next 5 years shown below, and you expect FCF to grow 3% per year beyond that 5 year horizon. You note that the company has $1,500,000 of outstanding debt and a required rate of return of 15%.

Based on this information is Super Company's stock undervalued?

 

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INPUT AREA YEARS FREE CASH FLOW ($000) 1,880 2,247 3 2,650 2,949 3,198 g2 - Continuing growth rate R- Cost of Capital 4 5 3.0% 15.0% Debt book value 1,500 Debt market value 2,000 Shares (thousands) 100 OUTPUT AREA YEARS PV 2 Period 1 cash flow Terminal value (PV of all DCF) Total company value Less debt Total Equity Value Stock value per share INPUT AREA YEARS FREE CASH FLOW ($000) 1,880 2,247 3 2,650 2,949 3,198 g2 - Continuing growth rate R- Cost of Capital 4 5 3.0% 15.0% Debt book value 1,500 Debt market value 2,000 Shares (thousands) 100 OUTPUT AREA YEARS PV 2 Period 1 cash flow Terminal value (PV of all DCF) Total company value Less debt Total Equity Value Stock value per share