You have been assigned the task of using the corporate, or free cash flow, model to estimate petry corporation’s intrinsic value. the firm’s wacc is 10.00%, its end-of-year free cash flow (fcf1) is expected to be $75.0 million, the fcfs are expected to grow at a constant rate of 5.00% a year in the future, the company has $200 million of long-term debt and preferred stock, and it has 30 million shares of common stock outstanding. what is the firm’s estimated intrinsic value per share of common stock?
a. $40.35
b. $41.82
c. $43.33
d. $44.85
e. $46.42

C. $43.33

Explanation:

FCF1 = $75.00

Constant growth rate = 5%

WACC = 10%

Total firm value = FCF1/(WACC-g) =$1,500

Value of debt & preferred=$200

Value of equity = $1,300

# of shares = 30

Value per share = equity value /shares =$43.33

support your answer using the data presented. (5 points). 4. based on the information you used to schedule and curve, which product would you recommend the shoe hut focus on, and why? provide details that support your answer. (5 points).

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