How much is each share worth


Problem

Consider a company that is forecasted to generate free cash flows of $25 million next year and $25 million the year after. After that, cash flows are projected to grow at a stable rate in perpetuity. The company's cost of capital is 11.2%. The company has $34 million in debt, $16 million of cash, and 18 million shares outstanding. Using an exit multiple for the company's free cash flows (EV/FCFF) of 17, how much is each share worth?

 

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Finance Basics: How much is each share worth
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