River Enterprises has $498 million in debt and 17 million shares of equity outstanding. Its...
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River Enterprises has $498 million in debt and 17 million shares of equity outstanding. Its excess cash reserves are $14 million. They are expected to generate $193 million in free cash flows next year with a growth rate of 2% per year in perpetuity. River Enterprises' cost of equity capital is 13%. After analyzing the company, you believe that the growth rate should be 3% instead of 2%. How much higher (in dollars) would the price per share be if you are right?
If the growth rate is 2%,the price per share is ?
If the growth rate is 3%,the price per share is ?
If you are right and the growth rate is 3%, the price per share would be ? higher.
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