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The firm just paid dividend $2.5 per share. Dividend will grow ten percent for three years. After that they are expected to be constant forever (exact same amount at year 3 dividend)

FCF: 42 million cash: 10 million debt: 72 million outstanding shares: 12 million equity cost of capital is 17%

WACC is 13% median enterprise value to free cash flows ratio of comparable firma is 7.5

A) use dividend discount model, what is estimate price of equity on per share basis?

B) use discounted cash flow model-what is estimated price of equity on per share basis?

 

C) using multiples of comparable firms what is the estimated price of equity on per share basis?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91608145

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