What is the share price of heavy metal

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Heavy Metal Corporation is expected to generate the following free cash flow over the next five years.

Year               FCF ($mln)

1                      53

2                      68

3                      78

4                      75

5                      82

1) After year 5, free cash flows resemble a growing perpetuity and are expected to grow at the industry average of 4% per year. Assume a discount rate of 11%. Estimate the value of Heavy Metal.

2) Referring to your answer for Q1, if Heavy Metal has 50 million shares outstanding (and no debt) what is the share price of Heavy Metal?

Reference no: EM131896512

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