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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) | 53.9 | 66.4 | 78.3 | 75.6 | 82.3 |
Thereafter, the free cash flows are expected to grow at the industry average of
3.9%
per year. Using the discounted free cash flow model and a weighted average cost of capital of
14.3%:
a.Estimate the enterprise value of Heavy Metal.
b.If Heavy Metal has no excess cash, debt of
$293
million, and
35
million shares outstanding, estimate its share price.
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