Jefferson Amalgamated has the following estimated free cash flows for the next 4

Question

Jefferson Amalgamated has the following estimated free cash flows for the next 4 years: $4.5 million, $6 million, $7.2 million and $12 million. After the fourth year, free cash flow is projected to grow at a constant 6%. Jefferson's WACC is 12.0%: the market value of debt and prefferd stock is $15 million and it has 10.0 million shares outstandidng. What is the value of Jefferson Amalgmated per share? Can you please explain your answer and show your work and how you got the answers and write it out stepb by step. Thanks.

Explanation / Answer

Value of firm = 156.28

value of equity = 156.28 - 15 - 10 = 131.28 million

value of equity per share = 131.28/10 = 13.128

12.00% Cash flows Year Discounted CF                            -   0 0.00                       4.50 1 4.02                       6.00 2 4.78                       7.20 3 5.12                     12.00 4 7.63                  212.00 4 134.73

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