Based on the released financial statements

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You have an option to buy Jack Clothing Corporation stocks. Based on the released financial statements, they have $500 million of debt and 14 million shares of stock outstanding. You expect the Corporation to generate the following cash flows over the next five years Year 1 2 3 4 5 FCF($millions) 75 84 96 111 120 Beginning with year six, you estimate that the Corporation's free cash flows will grow at 6% per year and that their weighted average cost of capital is 15%. Would you be willing to buy a share at the price $39? And why or why not?

Reference no: EM131595856

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