heavy metal corp is expected to generate the


Heavy Metal Corp. 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.

 

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