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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