Calculate the pv of free cash flow

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Reference no: EM131999562

Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made at the beginning of 2016 are as follows: ($ millions)

2017 2018 2019 2020 2021

Net income 1.0 2.6 4.4 4.9 5.2

Investment 1.0 1.6 1.8 2.0 2.0

Free cash flow 0 1.0 2.6 2.9 3.2

Phoenix’s recovery will be complete by 2021, and there will be no further growth in free cash flow.

a. Calculate the PV of free cash flow, assuming a cost of equity of 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value =$ million

b. Assume that Phoenix has 15 million shares outstanding. What is the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price per share =$

c. What is Phoenix’s P/E ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio=

Reference no: EM131999562

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