Free cash flow for the firm

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Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year. It is expected the FCFF will keep a sustainable growth rate of 5%. The company has 2 million common shares outstanding. In addition, the following information has been gathered: Capital structure: D/E=0.2:0.8; Market value of Debt: VD =$5,000,000; Required return on equity: kE =15% Cost of debt before tax =6% Tax rate: tc =25%; Determine the fair value of HTA stock.

Reference no: EM131318245

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