Question
River Enterprises has $510million in debt and 17million shares of equity outstanding. Its excess cash reserves...
River Enterprises has $510million in debt and 17million shares of equity outstanding. Its excess cash reserves are $ 13million. They are expected to generate $203million in free cash flows next year with a growth rate of 2% per year in perpetuity. River Enterprises' cost of equity capital is 11%. After analyzing the company, you believe that the growth rate should be 3% instead of 2%. How much higher (in dollars) would the price per share be if you are right?
If the growth rate is 2%, the price per share is $nothing. (Round to the nearest cent.)
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