22. You must estimate the intrinsic value of Noe Technologies\' stock. The end-o

Question

22.

You must estimate the intrinsic value of Noe Technologies' stock. The end-of-year free cash flow (FCF1) is expected to be $27.50 million, and it is expected to grow at a constant rate of 7.0% a year thereafter. The company's WACC is 10.0%, it has $125.0 million of long-term debt plus preferred stock outstanding, and there are 15.0 million shares of common stock outstanding. What is the firm's estimated intrinsic value per share of common stock?

a. $54.89 b. $52.78 c. $50.67 d. $57.08 e. $48.64

Explanation / Answer

b. $ 52.78

Total Value of common stock = FCF / WACC - g = $ 27.5 M/ 0.10- 0.07 = $ 916.67 Million

Intrinsic value per share = $916.67 M - 125 M / 15.0 M = $ 52.78

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