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A company is projected to have a free cash flow of $400 million next year, growing...

A company is projected to have a free cash flow of $400 million next year, growing at a 5% rate until the end of year 3. After that, cash flows are expected to grow at a stable rate of 2.5% in perpetuity. The company's cost of capital is 8.0%. The company owes $110 million to lenders and has $5 million in cash. If it has 250 million shares outstanding, what is your estimate for its stock price? Round to one decimal place.

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Answer #1

Stock price=$36.8 as follows:

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