Company hta had free cash flow for firm fcff of 1500000

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Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year. It is expected the FCFF will keep a sustainable growth rate of 5%. The company has 2 million common shares outstanding. In addition, the following information has been gathered:

Capital structure: D/E=0.2:0.8;

Market value of Debt: VD =$5,000,000;

Required return on equity: kE =15%

Cost of debt before tax =6%

Tax rate: tc =25%;

Determine the fair value of HTA stock.

Reference no: EM13475687

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