Common shares outstanding-what is value of each share

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Two FCFF Valuation problems below...

1. Gamecocks Inc.'s free cash flow to the firm (FCFF) was $20 million in its most recent fiscal year that just ended. The company's FCFF is expected to grow steadily at 5% per year in perpetuity. The company's weighted average cost of capital is 9.8%. The market value of the company's debt equals 26% of its total value and the rest is the value of its common stock. If Gamecocks has 10 million common shares outstanding, what is the value of each share?)_______(round to the nearest cent)

2. A company’s FCFF in its most recent fiscal year was $50 million. FCFF is expected to grow at a rate of 4% in perpetuity. The company’s weighted average cost of capital is 9%. The face value of its outstanding bonds is $500 million, paying annual coupons with a coupon rate of 6% maturing in 5 years, and have a YTM of 5.5%. The company pays annual preferred dividends of $70 million and the required return of preferred stockholders is 7%. The company has 22 million common shares outstanding. What is the value of each common stock?

Reference no: EM131350607

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