Firm estimated value per share of common stock

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Corinth Corp. is an early stage firm that does not pay any dividends and has no plans to pay dividends in the near future. As an analyst, you have been charged with assessing the value of Corinth Corp. common stock using a corporate valuation technique based on free cash flows. You have projected that Corinth Corp.'s free cash flows over the next five years will be as follows:

  • Year 1($1,500,000) (a negative cash flow)
  • Year 2 $2,500,000
  • Year 3 $5,000,000
  • Year 4$7,500,000
  • Year 5$8,250,000

After the fifth year, future free cash flows are expected to grow at a constant rate of 5.0%. Corinth Corp. has a WACC of 8.5%, debt outstanding of $10,000,000 and existing preferred stock outstanding with a market value of $45,000,000.

If Corinth Corp. has 8 million shares of common stock outstanding, what is the firm's estimated value per share of common stock?

Reference no: EM132485116

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