What constant expected growth rate of free cash flow

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Prokter and Gramble (PKGR) has historically maintained a debt-equity ratio of approximately 0.25. The firm enjoys very stable demand for its products, and consequently it has a low equity beta of 0.50 and can borrow at 4.25%, just 25 basis points over the risk-free rate of 4%. The market risk premium is 6%, and PKGR's tax rate is 20%.

Question 1: Show the PKGR's WACC?

Question 2: This year, PKGR is expected to have free cash flows of $6 billion. PKGR has 2.6 billion shares outstanding, and its current stock price is $54 per share. What constant expected growth rate of free cash flow is consistent with its current stock price?

Reference no: EM132995712

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