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You have been asked to calculate the price of a firm using free cash flow evaluation. Last year XYX Company has Free Cash Flow of $12 million. You expect the cash flows to grow at 10% for the next two years, then at 9% for the following two years and 6% thereafter. The WACC (required rate of return is 8.5% and the firms tax rate is 40%. Use Excel to solve the following.

1. What is the value of the firm?

2. If the market value of the debt is $350 million and the number of share outstanding is 10 million, what is the price per share of the firm?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91750788

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