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  3. you expect a company to have free cash flows of $4

You expect a company to have Free Cash Flows of $400k, $500k and 600k in...

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Finance

  1. You expect a company to have Free Cash Flows of $400k, $500k and 600k in the next three years. (k is the abbreviation for thousand, so 100k means 100,000. Similarly, m is the abbreviation for million) After that you expect the cash flows to grow 5% per year forever. The companys bondholders expect a 5% return, its weighted average cost of capital is 8% and its stockholders (shareholders) expect a 12% return. The company bonds have a book value of 2m and a market value of 1.5m and there is no preferred stock. If the company has 100k shares of stock, what is the best estimate of the value of each share?

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