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ABC Corp. plans to finance its expansion by borrowing $40 million and halting dividends. No...

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Finance

ABC Corp. plans to finance its expansion by borrowing $40 million and halting dividends. No other debt or preferred stock is in the firm. The projected free cash flows are: Year 1 FCF = $8 million and Year 2 FCF = $10 million. The FCFs are expected to grow at constant rate of 6% after year 2. The WACC is 14%, and the company has 5 million shares of stock. What should be the current stock price?

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