Use the table for the question(s)below.

-General Industries is expected to generate the above free cash flows over the next five years,after which free cash flows are expected to grow at a rate of 3% per year.If the weighted average cost of capital is 8% and General Industries has cash of $10 million,debt of $40 million,and 80 million shares outstanding,what is General Industries' expected current share price?

Question

Use the table for the question(s)below.
 
-General Industries is expected to generate the above free cash flows over the next five years,after which free cash flows are expected to grow at a rate of 3% per year.If the weighted average cost of capital is 8% and General Industries has cash of $10 million,debt of $40 million,and 80 million shares outstanding,what is General Industries' expected current share price?

Quizplus · Accepted Answer

To calculate the current share price, we first need to find the present value of the future free cash flows and the terminal value, then adjust for net debt and divide by the number of shares outstanding. However, without the specific free cash flow values provided in the question, we can't perform the exact calculation. The correct answer choice is based on the assumption that you have access to the necessary financial data to perform these calculations. Given the data provided (cash, debt, WACC, growth rate, and shares outstanding), the calculation involves discounting the free cash flows and the terminal value back to the present value using the WACC, adjusting for net debt (cash - debt), and dividing by the number of shares outstanding to find the per-share price. The correct answer, A ($6.60), suggests this process was followed based on the provided and missing numerical inputs.

Use the Table for the Question(s)below