Question

A company is forecasted to generate free cash flows of $62 million for the next three years. After that, cash flows are projected to grow at a 2.9% annual rate in perpetuity. The company's cost of capital is 7.3%. The company has $77 million in debt, $11 million of cash, and 21 million shares outstanding. What's the value of each share?

Answer #1

- Value of company = $ 1335.515. Million
- Value of shareholders fund = $ 1258.515 million
- Value of each share. = $ 59.93
- Cash is a part of shareholder fund so we don't deduct cash balance from shareholder fund.
- Brief explanation given below.

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