Question

Year	0	1	2	3	4
FCF ($ million)	-30	25	25	25	25

FCF for firm Canyon Shopping Center (CSC) is listed in the table above. After year 4 FCF is expected to be $0. The weighted average cost of capital for CSC is 7%. If cash = $10 million, the market value of ASC’s debt = $35 million, and the number of shares outstanding is 5 million, estimate the share price.

Instruction: Type ONLY your numerical answer in the unit of dollars, NO $ sign, NO comma, and round to one decimal places. E.g., if your answer is $7,001.56, should type ONLY the number 7001.6, NEITHER 7,001.6, $7001.6, $7,001.6, NOR 7002. Otherwise, Blackboard will treat it as a wrong answer.

Answer 1

Canyon Shopping Center (CSC)
Year	0	1	2	3	4
1.FCF ($ million)	-30	25	25	25	25
2.PV F at 7%(1/1.07^yr.n)	1	0.93458	0.87344	0.81630	0.76290
3.PV at 7%(1*2)	-30	23.36449	21.83597	20.40745	19.07238
4. NPVat 7% (sum of row 3)---(Value of Firm)	54.68028
5.Add :Cash	10
6. Less: MV of Debt	-35
7. Value of Equity(4+5+6)	29.680281
8. No.of Equity shares o/s(in mlns.)	5
9. Share price(7/8)	5.936056
ie.	5.9	(Answer)