Question

Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $7,295.00 million this...

Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $7,295.00 million this year (FCF1FCF1 = $7,295.00 million), and the FCF is expected to grow at a rate of 26.20% over the following two years (FCF2FCF2 and FCF3FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26% per year, which will last forever (FCF4FCF4). If Extensive Enterprise Inc.’s weighted average cost of capital (WACC) is 12.78%, what is the current total firm value of Extensive Enterprise Inc.?

$21,805.69 million

$163,980.34 million

$145,101.13 million

$120,917.61 million

Extensive Enterprise Inc.’s debt has a market value of $90,688 million, and Extensive Enterprise Inc. has no preferred stock. If Extensive Enterprise Inc. has 225 million shares of common stock outstanding, what is Extensive Enterprise Inc.’s estimated intrinsic value per share of common stock?

$134.35

$133.35

$147.79

$403.06

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Answer #1

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