Calculate the value of the firm once it achieves constant

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CORPORATE VALUATION

You are an analyst on Wall Street and have been assigned Suzy Q industries. However SQ is still growing and doesn't pay dividends, nor have any plans to do so in the future. Therefore, you have decided to utilize the Corporate Valuation model to assess the value of the firm and ultimately determine a feasible stock valuation. You have already estimated their Free Cash Flows for the next four years as $3 million, $6 million, $10 million, and 15 million respectively. After four years, you anticipate SQ matures with a constant 7% growth rate. The firms WACC is 12%. The market value of their debt and preferred stock is $60 million, and it has 10 million shares of common stock outstanding. What is the value of SQ? What would you determine their stock price to be utilizing this method? (Hint: calculate the value of the firm once it achieves constant growth. Then discount FCF's and value to obtain a current value.)

Reference no: EM132288862

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