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What is Gonzales Corporation expected current share price

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Question - Gonzales Corporation generated free cash flow of $88 million this year. For the next two years, the company's free cash flow is expected to grow at a rate of 8%. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year. If the weighted average cost of capital is 10% and Gonzales Corporation has cash of $100 million, debt of $300 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?

A. $16.42

B. $13.85

C. $14.42

D. $18.42

E. $19.50

Reference no: EM132965436

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