Gonzales corporation generated free cash flow of 81million


Gonzales Corporation generated free cash flow of $81million this year. For the next two years, the company's free cash flow is expected to grow at a rate of 9%. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year. If the weighted average cost of capital is 12% and Gonzales Corporation has cash of $90 million, debt of $250 million, and 100 million shares outstanding, what is Gonzales Corporation's expected current share price?

A. $9.93

B. $ 9.43

C. $12.91

D. $11.42

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Financial Management: Gonzales corporation generated free cash flow of 81million
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