Question

Scampini Technologies is expected to generate $200 million in free cash flow next year, and FCF is expected to grow at a constant rate of 3% per year indefinitely. Scampini has no debt, preferred stock, or non-operating assets, and its WACC is 14%. If Scampini has 55 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent.

Each share of common stock is worth $ , according to the corporate valuation model.

Answer #1

Information given:

Free cash flow next year (FCF1) = 200 million

Required rate = 14% or .14

Growth rate = 3% or .03

Number of shares outstanding = 55 million

Total firm value =Free cash flow next year (FCF1) / required rate - growth rate

Total firm value = 200 / 0.14 - 0.03

Total firm value = 200 / 0.11

Total firm value = $1818.18

Value per share = Total firm value / number of shares outstanding

Value per share = 1818.18 Million / 55 Million

**Value per share = $33.06 / share**

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