Can someone help me with the following Corporate Finance problem?
The FCFE of the last year is 3 millions and the number of issued shares is 4 millions. The expected returns of equity is 12.5%, the wacc is 9.4%. If the FCFE growth at 5.5% for ever, what is the market value of one stock?
1) Present Value of Equity = [3 x (1.055)]/(0.125-0.055) = $45.2 million
2) Equity/Share = 45.2/4 = $11.3/share
The WACC given in the question is just to throw you off - very standard corporate finance question.
oh nice thank you for answering. But i don't understeand how you calculated the value "1055". Thanks so much for helping!!
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