Heavy Metal Corporation is expected to generate the following free cash flows over the next...
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Accounting
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:
Part 1
| Year | 1 | 2 | 3 | 4 | 5 |
| FCF ($ million) | 51.2 | 68.4 | 78.4 | 74.6 | 83.8 |
. Thereafter, the free cash flows are expected to grow at the industry average of
3.8%
per year. Using the discounted free cash flow model and a weighted average cost of capital of
14.8%:
a. Estimate the enterprise value of Heavy Metal.
b. If Heavy Metal has no excess cash, debt of
$281
million, and
44
million shares outstanding, estimate its share price.
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