Heavy metal finance question
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:
Year | 1 | 2 | 3 | 4 | 5 |
FCF ($ millions) | 53 | 68 | 78 | 75 | 82 |
After then, the free cash flows are expected to grow at the industry average of 4% per year. Using the discounted free cash flow model and a weighted average cost of capital of 14%:
- a. Estimate the enterprise value of Heavy Metal.
- b. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimate its share price.
12 years ago
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