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# You have been asked to use the free cash flow model to estimate Microsoft's ordinary share value. Microsoft's weighted average cost of capital is 9%, its next end-of-year free cash flow (FCF) is expected to be $250.0 million, the FCFs

You have been asked to use the free cash flow model to estimate Microsoft's ordinary share value. Microsoft's weighted average cost of capital is 9%, its next end-of-year free cash flow (FCF) is expected to be $250.0 million, the FCFs are expected to grow at a constant rate of 7% per year in the future, the company has long-term debt plus preference shares worth a total of $600 million, and it has 200 million ordinary shares outstanding. What is Microsoft's estimated price per ordinary share?

- Expert Answer

## To estimate Microsoft s price per ordinary share using the free cash flow model we need to calculate View the full answer

**Related Book For**

## Intermediate Financial Management

ISBN: 9780357516669

14th Edition

Authors: Eugene F Brigham, Phillip R Daves

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The weighted average cost of capital (WACC) represents a firm\'s average after-tax cost of capital from all sources, including common stock, preferred stock, bonds, and other forms of debt. WACC is the average rate that a company expects to pay to finance its assets