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Heavy Metal Corporation is expected to generate the following free cash flows over the next...

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Finance

Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:

Year

1

2

3

4

5

FCF ($ million)

53.553.5

66.566.5

78.478.4

76.876.8

80.680.6

Thereafter, the free cash flows are expected to grow at the industry average of

4.2 %4.2%

per year. Using the discounted free cash flow model and a weighted average cost of capital of

13.2 %13.2%:

a.Estimate the enterprise value of Heavy Metal.

b.If Heavy Metal has no excess cash, debt of

$ 318 million, and 38 million shares outstanding, estimate its share price.

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