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Heavy Metal Corporation is expected to generate the following free cash flows over the next five?...

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Finance

Heavy Metal Corporation is expected to generate the followingfree cash flows over the next five? years: Year 1 2 3 4 5 FCF? ($million) 51.7 66.4 76.7 76.5 82.4 ?Thereafter, the free cash flowsare expected to grow at the industry average of 4.3 % per year.Using the discounted free cash flow model and a weighted averagecost of capital of 13.2 %?: a.??Estimate the enterprise value ofHeavy Metal. b.??If Heavy Metal has no excess? cash, debt of $ 310?million, and 40 million shares? outstanding, estimate its shareprice.

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3.7 Ratings (388 Votes)
aEnterprise value of Heavy Metal Firms Enterprise value is the Present Value of the Free Cash Flows plus the Present Value of Terminal Value Terminal Value TV FCF51 g Ke g 8240 Million1 00430 01320    See Answer
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Heavy Metal Corporation is expected to generate the followingfree cash flows over the next five? years: Year 1 2 3 4 5 FCF? ($million) 51.7 66.4 76.7 76.5 82.4 ?Thereafter, the free cash flowsare expected to grow at the industry average of 4.3 % per year.Using the discounted free cash flow model and a weighted averagecost of capital of 13.2 %?: a.??Estimate the enterprise value ofHeavy Metal. b.??If Heavy Metal has no excess? cash, debt of $ 310?million, and 40 million shares? outstanding, estimate its shareprice.

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