A company estimates the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 6% rate. The company's cost of capital is 12%. the company has $3 million in marketable securities, $50 million in debt, and 10 million shares of stock.
1 2 3
Free cash flow ($ millions) -5 15 30
a. find out the company's horizon, value?
b. find out the company's current value of operations.
c. find out the value of one share of share?
d. The stock is selling for $32.50. Is it appropriately priced in the market? describe.