A firm is expected to produce $50 million free cash flow next year. The WACC is 10% and the free cash flow is expected to grow at a constant rate of 3%. The firm has $20 million debt and $5 million preferred stock. If the number of common shares is 40 million, what is the stock (common share) price today?

A firm is expected to produce $50 million free cash flow next year. The WACC is 10% and the free cash flow is expected to grow at a constant rate of 3%. The firm has $20 million debt and $5 million preferred stock. If the number of common shares is 40 million, what is the stock (common share) price today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 13P

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