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Given the following information: Year 1 free cash flow: 40 million Year 2 free cash flow...

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Finance

Given the following information: Year 1 free cash flow: 40million Year 2 free cash flow 90 million Year 3 free cash flow 100million After year 3, expected FCF growth is expected to be 4% Thecost of capital is 9% Short term investments is 50 million Debt iscurrently 25 million Preferred shock is 5 million There are 20million outstanding stock shares.

1. Calculate the intrinsic stock price

. If the current stock price was $100.00, would you buy thestock? Why/ why not.

Answer & Explanation Solved by verified expert
4.2 Ratings (589 Votes)
1 WACC 900 Year Previous year FCF FCF growth rate FCF current year Horizon value Total Value Discount factor Discounted value 1 0 000 40 40 109 366972 2    See Answer
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Given the following information: Year 1 free cash flow: 40million Year 2 free cash flow 90 million Year 3 free cash flow 100million After year 3, expected FCF growth is expected to be 4% Thecost of capital is 9% Short term investments is 50 million Debt iscurrently 25 million Preferred shock is 5 million There are 20million outstanding stock shares.1. Calculate the intrinsic stock price. If the current stock price was $100.00, would you buy thestock? Why/ why not.

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