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Apply the free cash flow

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Question - The chief financial officer (CFO) of Quinn Logistics wants to determine the value of its shares using the free cash flow method. The CFO calculated the free cash flows for the period 2015-2019 as follows;

Quinn holdings: free cash flows 2015-2019

Year FCF2015-2019

2015 650 000

2016 720 000

2017 775 000

2018 825 000

2019 880 000

Additional information:

FCF growth after 2019 to infinity 5%

Weighted average cost of capital (WACC) 11%

Market value of debt R4 200 000

Market value of preference shares R1 200 000

Number of ordinary shares issued 200 000

Required - Apply the free cash flow method to the information provided by the CFO to calculate the value of an ordinary share of Quinn Holdings.

Reference no: EM132663051

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