What is the maximum price per share

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Problem 1.

Your firm is considering the purchase of Golden Opportunities Inc (GO). The current cash flow from assets for GO is $71 million, which is expected to grow at 10%/yr for the next 5 years before leveling off to 4%/yr for the indefinite future. The cost of capital for your firm and GO are 11%/yr and 9%/yr, respectively. GO currently has 2.5 million shares of stock outstanding and $22 million in debt outstanding. What is the maximum price per share you firm should pay for GO?

Reference no: EM132459212

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