Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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You must estimate the intrinsic value of Petty Corporation's stock. The end-of-year
free cash flow (FCF₁) is expected to be $70 million, and it is expected to grow at a
constant rate of 5.0% a year thereafter. The company's WACC is 10.0%, it has $200
million of long-term debt plus preferred stock outstanding, and there are 30 million
shares of common stock outstanding. What is the firm's estimated intrinsic value per
share of common stock?
$48.80
$36.80
$40.00
$34.40
$49.60
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Transcribed Image Text:You must estimate the intrinsic value of Petty Corporation's stock. The end-of-year free cash flow (FCF₁) is expected to be $70 million, and it is expected to grow at a constant rate of 5.0% a year thereafter. The company's WACC is 10.0%, it has $200 million of long-term debt plus preferred stock outstanding, and there are 30 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock? $48.80 $36.80 $40.00 $34.40 $49.60
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