Determine barrett enterprise value

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1. Barrett Industries invests a large sum of money in R & D; as a result, it retains and reinvests all of its earnings. In other words, Barrett does not pay any dividends and its earnings. In other words, Barrett does not pay any dividends and it has no plans to pay dividends in the near future. A major pension fund is interested in purchasing Barrett s stock. The pension fund manager has estimated Barrett s free cash flows for the next four year, free cash flow is projected to grow at a constant 7% Barrett s WACC is 12%, its debt and preferred stock total $60 million, and it has 10 million shares of common stock outstanding.

a) Determine Barrett s enterprise value

b) Estimate Barrett s price per share of common stock.

Reference no: EM132443378

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