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A firm has FCFF of $20.5M last year and with $1.5M of debt and 8M...

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Finance

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A firm has FCFF of $20.5M last year and with $1.5M of debt and 8M shares outstanding. The required return on equity is 10% and WACC is 7%. Assume FCFF is expected to grow at 8% for the forseeable future. a. Calculate the firm's value b. Calculate the stock price c. Explain how this FCFE based valuation differs from the DDM. FCFFO gFCF WACC FCF1 Firm value Firm value D #Shares Vo

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