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Phoenix’s recovery will be complete by 2021 and there will be no further growth in free cash flow. a. Calculate the PV of free cash flow assuming a cost of equity of 9% Assume that Phoenix has

Phoenix’s recovery will be complete by 2021, and there will be no further growth in free cash flow.
a. Calculate the PV of free cash flow, assuming a cost of equity of 9%.
b. Assume that Phoenix has 12 million shares outstanding. What is the price per share?
c. If the 2016 net income is $1 million, what is Phoenix’s P/E ratio? How do you expect that P/E ratio to change from 2017 to 2021?
d. Confirm that the expected rate of return on Phoenix stock is exactly 9% in each of the years from 2017 to 2021.

Phoenix Corp faltered in the recent recession but is recovering

Apr 26 2020 View more View Less

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