Heavy Metal Corporation is expected to generate the following
free cash flows over the next five years:
Year
1
2
3
4
5
FCF ($ million)
52.4
68.3
76.3
74.6
81.3
After that, the free cash flows are expected to grow at
the industry average of 3.4% per year. Using the discounted free
cash flow model and a weighted average cost of capital of
14.5%:
a. Estimate the enterprise value of Heavy Metal.
b. If Heavy Metal has no excess cash, debt of $302
million, and 37 million shares outstanding, estimate its
share price.
Heavy Metal Corporation is expected to generate the following free cash flows over the next five years: Year 1 2 3 4 5
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