Heavy Metal Corporation is expected to generate the following free cash flows over the next five years
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Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:Year 1 2 3 4 5FCF ($ millions) 53 68 78 75 82After
then, the free cash flows are expected to grow at the industry average
of 4% per year. Using the discounted free cash flow model and a weighted
average cost of capital of 14%:a. Estimate the enterprise value of Heavy Metal.b. If Heavy Metal has no excess cash, debt of $300 million, and 40 million shares outstanding, estimates its share price.Note:1).Complete
the corporate valuation problem, Free Cash Flow Valuation, in an Excel
document. Show the details of your own calculation and work in your
answer to the problem.2).Please
don’t copy and paste the solution from ©2011 Pearson Education, Inc.
Publishing as Prentice Hall and Seminar 5 Corporate Finance Equivalence
of APV, FTE, and WACC OR from any other one. You’ve to show your own
work.
