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The present value of JECK​ Co.'s expected free cash flow is $106 million. If JECK has...

The present value of JECK​ Co.'s expected free cash flow is $106

million. If JECK has $27

million in​ debt, $6

million in​ cash, and 2.6

million shares​ outstanding, what is its share​ price?

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Answer #1

Enterprise value=Market capitalization + debt - cash
Expected free cash flow of $106 million refers to enterprise value
Debt=$27 million
Cash =$6 million
Number of shares outstanding=2.6 million

106=(Share price)*(Number of shares outstanding) + 27-6
106=(Share price)*(2.6) + 21
106-21=(Share price)*(2.6)
85/2.6=Share price
Share price=32.69230769 or $32.69 (Rounded to 2 decimal places)

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