You have been asked to value a company using the fcf method


You have been asked to value a company using the FCF method. The free cash flow last year for the company was $20 million. Free cash flow for next year expected to be -$20 million. The following year you expect is to be $15 million. Then you project the cash flows will grow at 15% for the next three years and slow to a sustainable growth rate of 5.00% thereafter. What is the value you get for the operations of the firm? The firm has a 5 million shares outstanding and cash of $50 million. in addition the firm has a par value on bonds outstanding of $25 million that have a coupon rate of 4%, a maturity of 5 years, a yield to maturity 4.25%. What would be value for the share price? Note the firm WACC is 10%.

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Financial Management: You have been asked to value a company using the fcf method
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