A firm has 120,000 shares of stock outstanding, a sustainable rate of growth of 3.8, and $648,200 in free cash flows. What value would you place on a share of this firm's stock if you require a 14% rate of return?

Name: A firm has 120,000 shares of stock outstanding, a sustainable rate of growth of 3.8, and $648,200 in free cash flows. What value would you place on a share of this firm's stock if you require a 14% rate of return?
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Question

Quizplus · Accepted Answer

Price = [$648,200/(.14 - .038)]/120,000 = $52.96

A Firm Has 120,000 Shares of Stock Outstanding, a Sustainable