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Interest is compounded annually unless stated otherwise. Payments are at the end of the year unless...

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Finance

Interest is compounded annually unless stated otherwise.Payments are at the end of the year unless stated otherwise. Allbonds have a face value of $1000.

3. Lettuce Unite expects free cash flows of $10B next year,growing by 15% until year 2. After year 2, the growth rate falls to4%. The cost of capital is 14%. They have $2B in cash andmarketable securities and $25B in debt. There are 8B sharesoutstanding. Find the share price.

Answer & Explanation Solved by verified expert
4.4 Ratings (822 Votes)
WACC 1400 Year Previous year FCF FCF growth rate FCF current year Horizon value Total Value Discount factor Discounted value 1 0 000 10 10 114 87719 2 10    See Answer
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Interest is compounded annually unless stated otherwise.Payments are at the end of the year unless stated otherwise. Allbonds have a face value of $1000.3. Lettuce Unite expects free cash flows of $10B next year,growing by 15% until year 2. After year 2, the growth rate falls to4%. The cost of capital is 14%. They have $2B in cash andmarketable securities and $25B in debt. There are 8B sharesoutstanding. Find the share price.

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