Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made at the beginning of 2016 are as follows: ($ millions)
2017 2018 2019 2020 2021
Net income 1.0 2.6 4.4 4.9 5.2
Investment 1.0 1.6 1.8 2.0 2.0
Free cash flow 0 1.0 2.6 2.9 3.2
Phoenix’s recovery will be complete by 2021, and there will be no further growth in free cash flow.
a. Calculate the PV of free cash flow, assuming a cost of equity of 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value =$ million
b. Assume that Phoenix has 15 million shares outstanding. What is the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price per share =$
c. What is Phoenix’s P/E ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio=