Estimate of the Current Intrinsic Stock Price Assignment | Homework For You
PLEASE READ CAREFULLY
1. ANSWER THE QUESTION USING ONLY A FINANCIAL CALCULATOR
2. DO NOT USE EXCEL OR PVIF ONLY A FINANCIAL CALCULATOR
3. DO NOT USE EXCEL OR PVIF
3. IF YOU USE ANY FORMULAS WRITE THEM DOWN
QUESTION: Huxley Building Supplies’ last free cash flow was $1.75 million. Its free cash flow growth rate is expected to be constant at 25% for 2 years, after which free cash flows are expected to grow at a rate of 6% forever. Its weighted average cost of capital WACC is 12%. Huxley has $5 million in short-term investments and $7 million in debt and has 1 million shares outstanding. What is the best estimate of the current intrinsic stock price? DO NOT USE EXCEL AS IT IS NOT ALLOWED IN THIS CLASS. Get Finance homework help today