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Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF...

Scampini Technologies is expected to generate $50 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Scampini has no debt or preferred stock, and its WACC is 11%. If Scampini has 45 million shares of stock outstanding, what is the stock's value per share? Round your answer to two decimal places.

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

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Answer #1
Stock value per share = Today's value of company / No.of shares of stock outstanding
We can derive the today's value of company by using the following formula,
Value of company = [Current free cash flow *(1+growth rate)] / [Cost of capital - growth rate]
Value of company = [$50 million *(1+0.06)] / [0.11 - 0.06]
Value of company = $53 million / 0.05
Value of Company = $1060 millions
Stock value per share = $1060 millions / 45 millions
Stock value per share = $23.56 per share
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