A company is projected to generate free cash flows of $150 million next year and $210 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company's cost of capital is 8.0 %. It has $200 million worth of debt and $40 million of cash. There are 30 million shares outstanding. If the terminal EV/FCFF exit multiple at the end of year 2 is 4.0, what's your estimate of the company's share value? Round to one decimal place.
A company is projected to generate free cash flows of $150 million next year and $210 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company's cost of capital is 8.0 %. It has $200 million worth of debt and $40 million of cash. There are 30 million shares outstanding. If the terminal EV/FCFF exit multiple at the end of year 2 is 4.0, what's your estimate of the company's share value? Round to one decimal place.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter21: Dynamic Capital Structures And Corporate Valuation
Section: Chapter Questions
Problem 9P
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