The company currently has debt and preferred stock totaling


Problem: An analyst estimating the intrinsic value of the ABC Corporation stock estimates that its free cash flow at the end of the year (t = 1) will be $350 million. The analyst estimates that the firm's free cash flow will grow at a constant rate of 5% a year, and that the company's WACC is 9%. The company currently has debt and preferred stock totaling $500 million and 150 million outstanding shares of common stock. What is the intrinsic value (per-share) of the company's stock? Show explanation please.

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Finance Basics: The company currently has debt and preferred stock totaling
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