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Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below. Year 1 2 3 4 5 FCF -$22.16 $38.8 $43.5 $51.3 $56.9 The weighted average cost of capital is

Quantitative Problem 2: Hadley Inc. forecasts the year-end free cash flows (in millions) shown below.

Year 1 2 3 4 5
FCF -$22.16 $38.8 $43.5 $51.3 $56.9

The weighted average cost of capital is 10%, and the FCFs are expected to continue growing at a 5% rate after Year 5. The firm has $24 million of market-value debt, but it has no preferred stock or any other outstanding claims. There are 19 million shares outstanding. Also, the firm has zero non-operating assets. What is the value of the stock price today (Year 0)? Round your answer to the nearest cent. Do not round intermediate calculations.

Apr 13 2021 View more View Less

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