Hi everyone, I am not sure how to get started with this problem because there is no growth rate.
Question:
A company is projected to generate free cash flows of $169 million next year and $197 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company's cost of capital is 11.9%. It has $136 million worth of debt and $66 million of cash. There are 24 million shares outstanding. If the exit multiple for this company's free cash flows (EV/FCFF) is 6.6, what's your estimate of the company's stock price? Round to one decimal place.
Thank you for your help.
Question:
A company is projected to generate free cash flows of $169 million next year and $197 million at the end of year 2, after which it is projected grow at a steady rate in perpetuity. The company's cost of capital is 11.9%. It has $136 million worth of debt and $66 million of cash. There are 24 million shares outstanding. If the exit multiple for this company's free cash flows (EV/FCFF) is 6.6, what's your estimate of the company's stock price? Round to one decimal place.
Thank you for your help.