Problem:
BBB estimates that its free cash flow at the end of this year will be 300 million. Buffet decides not to pay a dividend. He estimates that the firms free cash flow will grow at a constant rate of 6 percent per year, and the companies cost capital is 10.2 pecent. The company has debt and preferred stock totaling 500 million. There are 150 million outstanding shares of common stock.
Required:
Question: What is the intrinsic value (per share) of stock?
Note: Show all workings.