Abc waterhouses free cash flow next year will be 250


ABC Waterhouse's free cash flow next year will be $250 million and it is widely expected to grow at a 5 percent annual rate indefinitely. The company's weighted average cost of capital is 11 percent, the market value of its liabilities is $2.5 billion, and it has 32 million shares outstanding.

Estimate the price per share of ABC's common stock.

a. $32.08

b. $52.08

c. $22.58

d. $25.85

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Financial Management: Abc waterhouses free cash flow next year will be 250
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