See Candy had a FCFE of $6.1M in 2016 and has 2.32M shares outstanding. See's cost...
See Candy had a FCFE of $6.1M in 2016 and has 2.32M shares outstanding. See's cost of equity (required return) is 9.3%. If FCFE is expected to grow at 6.5% forever, the price per share of See Candy should be ____________.
A- $108.00
B- $68.29
C- $100.01
D- $232.02
Homework Answers
HI
Here per share FCFE = 6.1/2.32 = $ 2.63
cost of equity k = 9.3%
growth rate g = 6.5%
So Price per share P = per share FCFE*(1+g)/(k-g)
=2.63 *(1+6.5%)/(9.3%-6.5%)
= $100.01
Thanks
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