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  3. given the following information: year 1 free cash

Given the following information: Year 1 Free cash flow: 40 million Year 2 Free cash flow 90...

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Finance

Given the following information:

Year 1 Free cash flow: 40 million

Year 2 Free cash flow 90 m

Year 3 Free cash flow 100 m

After year 3, expected FCF growth is expected to be 4%

The cost of capital is 9%

Short term investments = 50 million

Debt is currently 25 million

Preferred stock = 5 million

There are 20 million outstanding stock shares.

1. Calculate the intrinsic stock price.

2. If the current stock price was $100.00, would you buy thestock? Why/WHY NOT:

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