Question

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.

 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