Estimate the price per share for interco stock

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Assume the forecasted free cash flows over the next five years from year 1 to year 5 for the firm Interco are (cash flows are in millions of $): year 1 = 186, year 2= 202, year 3 = 220, year 4 = 239, year 5 = 260. Assume that these cash flows all occur at the end of the year. Also assume that the terminal firm value of Interco at the end of year five is estimated to be 17 times its year five free cash flow of $260 million. Also assume that Interco has net debt obligations of $318.5 million and that there are 37.5 million shares of stock.

Based on the above assumptions and assuming a discount rate for the total firm operations (WACC) of 16.5%, estimate the price per share for Interco's stock.

Reference no: EM133113942

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