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What is intrinsic value of company common stock

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Reference no: EM132939511

Question - An analyst is trying to estimate the intrinsic value of Burress Inc. The analyst has estimated the company's free cash flows for the following years:

Year Free Cash Flow

1 P3,000

2 4,000

3 5,000

The analyst estimates that after three years (t = 3) the company's free cash flow will grow at a constant rate of 3 percent per year. The analyst estimates that the company's weighted average cost of capital is 10 percent. The company's debt and preferred stock has a total market value of P25,000 and there are 1,000 outstanding shares of common stock. What is the (per-share) intrinsic value of the company's common stock?

Reference no: EM132939511

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