What is the common stock per share

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Reference no: EM132939866

Angel Enterprise was going public in 2018. You were wondering whether the $30 per share offer price is a fair price. You decided to use discounted cash flow approach to value the company's stock. You gathered the following data:

Year FCF                   Other Data
2019 $600,000    Growth rate of FCF beyond 2023 = 3%
2020 $900,000    Weighted Average Cost of Capital (WACC) = 10%
2021 $1,400,000  The firm has no debt
2022 $1,800,000  Number of common shares outstanding = 1,000,000
2023 $2,500,000

Problem a.
Based on your valuation, what is the common stock per share? Is the stock worth buying?

Problem b. What is the common stock per share if the terminal growth rate (growth rate beyond 2023) were 5% instead of 3%?

Reference no: EM132939866

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