Heavy metal finance question
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years:
|
Year |
1 |
2 |
3 |
4 |
5 |
|
FCF ($ millions) |
53 |
68 |
78 |
75 |
82 |
After 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, estimate its share price.
