What is the intrinsic value of the stock

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Apple currently produces annual free cash flow of 40 billion a year. The company has long-term debt of $18 billion and Cash and Marketable Securities of $150 billion. Given that the stock currently trades in the marketplace at $100 and that there are 6 billion shares outstanding, at what rate is the market factoring in for FCF growth assuming that the stock is correctly valued and that the FCF will grow constantly next year and beyond. Use a WACC of 8% for your calculation. Secondly, assume that FCF is going to grow at 7% for the next 3 years as they introduce new products and that in year 4 and beyond the FCF will grow at 1%. What is the intrinsic value of the stock given this new information? Comment on your findings.

Reference no: EM13873381

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