Gonzales Corportation generated free cash flow of $86 million this year. For the next two years, the company's free flow is expected to grow at a rate of 10%. After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year. If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?

Gonzales Corportation generated free cash flow of $86 million this year. For the next two years, the company's free flow is expected to grow at a rate of 10%. After that time, the company's free cash flow is expected to level off t othe industry long-term growth rate of 4% per year. If the weighted average cost of capital is 11% and Gonzales Corporation has cash of $100 million, debt of $275 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 20P

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