Your all-equity firm has beta of 2.0 and a free cash flow today of $10M. The firm

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Your all-equity firm has beta of 2.0 and a free cash flow today of $10M. The firm is expected to produce a perpetual free cash flow of $12M per year starting next year that grow at rate of 1 percent per year. Assume a risk free rate of 3.0 percent and an expected market risk premium of 6.0 percent. Your firm has 7M shares outstanding.

If your firm pays a total dividend of $20M, what is the cum-dividend price per share of your firm?

		10
		13.67
		10.82

Related Book For answer-question

Valuation The Art and Science of Corporate Investment Decisions

ISBN: 978-0133479522

3rd edition

Authors: Sheridan Titman, John D. Martin

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Posted Date: Dec 08, 2022 03:07 AM

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Your all-equity firm has beta of 2.0 and a free cash flow today of $10M. The firm

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Valuation The Art and Science of Corporate Investment Decisions

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