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

Quizplus · Accepted Answer

Price = [$648,200/(0.14 − 0.038)]/120,000 = $52.96

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