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Problem:

General Industries is expected to generate $22 million, $26 million, $29 million, $30 million and $32 million in free cash flows over the next five years, after which FCF are expected to grow at a rate of 3% per year.

Required:

Question: If the weighted average cost of capital is 8% and General Industries has cash of $10 million, debt of $40 million, and $80 million shares outstanding, what is the General Industries' expected current share price?

a. $6.60

b. $6.72

c. $7.67

d. $9.48

Note: Please answer in proper manner and show all computations

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173041

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