Solution-Firm equity value per share

Firm equity value per share

Reference no: EM133111897

Assume you have a company that has the following financials for fiscal year 2020:

$300 million in cash

$600 million in book value of debt

$500 million in market value of debt

The company will generate a net income of $350 million and a free cash flow of $200 million in 2021. The growth rates of the free cash flows will be 4% in 2022 (e.g., year 2022 FCF = (1+4%)*year 2021 FCF), 2% in 2023 (e.g., year 2023 FCF = (1+2%)*year 2022 FCF), and -3% (yes, negative growth rate) per year after 2023. If the cost of equity is 12%, the weighted average cost of capital is 10%, and the firm has 100 million shares outstanding in 2020, then the firm's equity value per share as of 2020 is $___.

Reference no: EM133111897

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Firm equity value per share

Reference no: EM133111897

Reference no: EM133111897

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