Analysts predict that Burks Corporation will have free cash flows (FCFs) of negative $20 million at t=1, positive $8 million at t=2, and a positive $10 million at t=3. From that point forward FCF is expected to grow at a constant 7 percent rate. The corporation just paid a $2.5 million dividend to existing shareholders. The company's after-tax WACC is 11 percent. the corporation has $30 million of net debt and 3 million shares of stock outstanding. What is your estimate of the current price per share?

Analysts predict that Burks Corporation will have free cash flows (FCFs) of negative $20 million at t=1, positive $8 million at t=2, and a positive $10 million at t=3. From that point forward FCF is expected to grow at a constant 7 percent rate. The corporation just paid a $2.5 million dividend to existing shareholders. The company's after-tax WACC is 11 percent. the corporation has $30 million of net debt and 3 million shares of stock outstanding. What is your estimate of the current price per share?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 7P

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