Computation of enterprise value and stock price
Rock Hard Corp expects the following free cash flows in millions over the next 5 years
1 150
2 200
3 180
4 210
5 300
After the fifth year, free cash flows are expected to grow at 5% per year. Using the discounted free cash flow model and a weighted average cost of capital if 15%
1. Estimate the enterprise value of Rock Hard
2. Rock hard has excess $cash of 20 million, debt of $550 million, and 80 million shares outstanding, estimate its stock price.