Gamecocks incs free cash flow to the firm fcff was 30, Ask an Expert

Finance

Gamecocks? Inc.'s free cash flow to the firm? (FCFF) was ?$30 million in its most recent fiscal year that just ended. The? company's FCFF is expected to grow steadily at 5?% per year in perpetuity. The? company's weighted average cost of capital is 6.5?%.

The market value of the? company's debt equals 27?% of its total value and the rest is the value of its common stock. If Gamecocks has 10 million common shares? outstanding, what is the value of each? share?

?(Hint:Step? 1: Find the discounted value of the? firm's FCFFs using the? constant-growth model with WACC as the discount rate.

Step? 2: Subtract the value of debt to find the value of common stock.

Step? 3: Divide by the total number of shares outstanding to find the price per? share).

The price of each share is ?$____ ?(Round to the nearest? cent.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92101308

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