Subtract the value of debt to find value of common stock

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Reference no: EM131347902

Gamecocks? Inc.'s free cash flow to the firm? (FCFF) was ?$30 million in its most recent fiscal year that just ended. The? company's FCFF is expected to grow steadily at 4?% per year in perpetuity. The? company's weighted average cost of capital is 6.6?%.The market value of the? company's debt equals 14?% of its total value and the rest is the value of its common stock. If Gamecocks has 10 million common shares? outstanding,what is the value of each? share?

?(Hint: Step? 1: Find the discounted value of the? firm's FCFFs using the? constant-growth model with WACC as the discount rate.

Step? 2: Subtract the value of debt to find the value of common stock.

Step? 3: Divide by the total number of shares outstanding to find the price per? share).

Reference no: EM131347902

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