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Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. ...

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Finance

Hadley Inc. forecasts the year-end free cash flows (in millions) shown below.

Year 1 2 3 4 5
FCF -$22.01 $37.9 $43.1 $51.4 $56.3

The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 21 million shares outstanding. Also, the firm has zero non-operating assets. What is the value of the stock price today (Year 0)? Round your answer to the nearest cent. Do not round intermediate calculations. $ per share

According to the valuation models developed in this chapter, the value that an investor assigns to a share of stock is dependent on the length of time the investor plans to hold the stock.

The statement above is -Select-truefalseCorrect 2 of Item 2.

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