Year 0 1 Revenue 630.00 Fixed costs 120.00 Variable costs 200.00 Add. investment in NWC 10.00 Add. investment in operating long-term assets 70.00 Depreciation 60.00 Interest expenses 35.00 Newly issued debt 25.00 Principle repayments 15.00 Market value of the firm: Price per share No. of shares Market value Short-term debt 200.00 Long-term debt 600.00 Common stock 18.00 100 1,800.00 Total 2,600.00 Cost of equity (Rs) 0.1400 Tax rate 0.40 Growth rate per year from year 1 through year 5 0.12 Growth rate after year 5 0.05 Based on the equity free cash flow model.

What is the price per share for the common stock?

Answer rating: 100% (QA)

Solution The price per share for the common stock can be calculated using the equity free cash flow ... View the full answer