Question

Citric's managers believe that it will have the following free cash flows. If the weighted average...

Citric's managers believe that it will have the following free cash flows. If the weighted average cost of capital is 14% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3. If there is $200 million in debt, $30 million in preferred stock, and 10 million shares outstanding, what is your estimate of stock price? Year 1 2 3 Free cash flow -$20.00 $48.00 $50.50 ​

a. $461.38 b. $574.41 c. $57.44 d. $46.14 e. $23.14

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
5. Wall Inc. forecasts that it will have the free cash flows (in millions) shown below....
5. Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. The weighted average cost of capital is 10% and the free cash flows are expected to continue to grow at 8.2 percent after Year 3 indefinitely. Year 1 2 3 Free cash flow $10.00 -$48.00 $150.50 A. Calculate the firm’s FCF for year 4. B. Calculate the Horizon value in year 3. C. Assuming a $150 million for the company’s total market value of...
The free cash flows (in millions) shown below are forecast by Simmons Inc. Year: 1 2...
The free cash flows (in millions) shown below are forecast by Simmons Inc. Year: 1 2 3 Free cash flow: -$25 $50 $55 respectively. If the weighted average cost of capital is 12% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? The balance sheet shows $25 million of short-term investments that are unrelated to...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.92 $38.3 $43.1 $52.1 $56.8 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 20 million shares outstanding. What is the value of the stock price...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.54 $37.9 $44 $52.6 $56.2 The weighted average cost of capital is 9%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $26 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 19 million shares outstanding. What is the value of the stock price...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.47 $37.2 $43.4 $51.3 $56.7 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 19 million shares outstanding. What is the value of...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.02 $38.2 $43.8 $52.5 $56.4 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The firm has $25 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 19 million shares outstanding. Also, the firm has zero...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3...
Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.95 $37.9 $43 $51.2 $55.2 The weighted average cost of capital is 12%, and the FCFs are expected to continue growing at a 4% rate after Year 5. The firm has $26 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 18 million shares outstanding. What is the value of the stock price...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year...
Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.06 $38.7 $43.5 $51.9 $55.3 The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 3% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 21 million shares outstanding. What is the value of...
A company is expected to have free cash flows of $1.75 million next year. The weighted...
A company is expected to have free cash flows of $1.75 million next year. The weighted average cost of capital is WACC= 12% and the expected constant growth rate is g=6%. The company has $1.5 million in short-term investments, $2 million in debt, and 1.5 million shares. What is the stock’s current intrinsic stock price?
Heavy Metal Corporation is expected to generate the following free cash flows over the next five​...
Heavy Metal Corporation is expected to generate the following free cash flows over the next five​ years: Year 1 2 3 4 5 FCF​ ($ million) 51.8 67.6 77.2 75.2 81.3 ​Thereafter, the free cash flows are expected to grow at the industry average of 3.6% per year. Using the discounted free cash flow model and a weighted average cost of capital of 13.5%​: a.  Estimate the enterprise value of Heavy Metal. b.  If Heavy Metal has no excess​ cash,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT