Year 0 1 Revenue 850.00
Fixed costs 100.00
Variable costs 200.00
Additional investment in NWC 10.00
Additional investment in operating long-term assets 70.00
Depreciation 60.00
Interest expenses 35.00
Newly issued debt 25.00
Principle repayments 15.00
Net change in debt 10.00
Tax rate 0.40
Market value of the firm:
Price per share No. of shares Market value Short-term debt 100.00
Long-term debt 600.00
Preferred stock 10.00 10 100.00
Common stock, equity 18.00 100 1,800.00
Total 2,600.00
Cost of equity (Rs) 0.1400
Growth rate per year from year 1 through year 5 0.12
Growth rate after year 5 0.05
According to the equity free cash flow model, what is the stock price per share?