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Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:
| Year | 1 | 2 | 3 | 4 | 5 |
| FCF ($ million) | 53.553.5 | 66.566.5 | 78.478.4 | 76.876.8 | 80.680.6 |
Thereafter, the free cash flows are expected to grow at the industry average of
4.2 %4.2%
per year. Using the discounted free cash flow model and a weighted average cost of capital of
13.2 %13.2%:
a.Estimate the enterprise value of Heavy Metal.
b.If Heavy Metal has no excess cash, debt of
$ 318 million, and 38 million shares outstanding, estimate its share price.
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