What is the enterprise value of a firm

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1. Assume the enterprise value of a firm is $2.5 billion. Further assume that the firm has $200 million in cash and $850 million in debt outstanding. If the firm has 75 million shares outstanding and the WACC is 9%, what is the value of a share of stock?

2. What is the enterprise value of a firm if the free cash flow for the coming year is $455 million and it is expected to grow at a constant rate of 3% per year? Assume that the appropriate discount rate is 8.5%.

3. What is the value of a stock that has a dividend of $2.00 for the coming year if the expected growth rate in the dividend is 8% per year for the subsequent 4 years, and then the dividend is expected to grow at 3% per year thereafter? Assume that the discount rate for the stock is 12%..

Reference no: EM131884615

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