For casts negative free cash flow

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AAA company forcasts a negative free cash flow for year 1. FCF1=-10 million, but it expects a positive free cash flow in year 2 FCF2=10 million. after year 2, FCF is expected to grow at a constant rate of 5% forever. the company's balance sheet shows 20 million of debt, 10 million of perferred stock and 5 million shares of common stock outstanding. the weighted average cost of capital WACC is 15%. draw a time line

a. What is expected FCF in year 3 FCF3?

b. What is the firms horizon value, HVt?

c. What is the market value MV of the firm's common equity today

d. What is the best estimate of the stock's price per share, Po?

Reference no: EM131913363

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