Question

calculate the price of a stock using the corporate valuation (FCF) method with excel. Create a...

calculate the price of a stock using the corporate valuation (FCF) method with excel. Create a model that has 4 years of abnormal growth and then settles into a constant growth rate using excel and show how to do it so i can replicate the steps. can use random numbers

  • Free cash flow in year 1
  • Free cash flow in year 2
  • Free cash flow in year 3
  • Free cash flow in year 4
  • Constant growth rate
  • WACC
  • Market value of debt and preferred stock
  • Number of shares of stock outstanding

And the excel must show the right intrinsic price of the stock

thank you .

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Answer #1

Values assumed: FCF0 = 10 million

Abnormal growth rate = 10%; constant growth rate = 3%

WACC = 12%

Market value of debt = 50 million

Market value of preferred stock = 20 million

Shares outstanding = 2 million

Formulas screenshot:

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