Suppose you are evaluating CleanAir Co., a renewable energy startup that does not pay dividends, and...
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Suppose you are evaluating CleanAir Co., a renewable energy startup that does not pay dividends, and you want to determine the value of their shares using a free cash flow model. To do this, you analyze their financial statements for several things: (1) present value of free cash flows, (2) liabilities, and (3) number of outstanding shares. After some analysis, you determine that the present value of CleanAir Co.'s free cash flows, liabilities, and number of outstanding shares are $155 million, $30 million, and 20 million, respectively, and that the cash flows will show no growth in the future. Using this information, and the free cash flow model, CleanAir Co.'s value per share is? Suppose you are evaluating CleanAir Co., a renewable energy startup that does not pay dividends, and you want to determine the value of their shares using a free cash flow model. To do this, you analyze their financial statements for several things: (1) present value of free cash flows, (2) liabilities, and (3) number of outstanding shares. After some analysis, you determine that the present value of CleanAir Co.'s free cash flows, liabilities, and number of outstanding shares are $155 million, $30 million, and 20 million, respectively, and that the cash flows will show no growth in the future. Using this information, and the free cash flow model, CleanAir Co.'s value per share is?
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The formula for the free cash flow model is Value per share Present value of free cash flows To... View the full answer
Related Book For
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson
Posted Date:
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