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What is the per share value of the firm common equity

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Reference no: EM133046285

Question - Below are the estimates of a firm's free cash flows for common equity shareholders for the next four years:

(In thousands of dollars)

 

Year 1

Year 2

Year 3

Year 4

Cash Flow for Common Equity

400

450

520

600

After year 4, the free cash flow is expected to grow at a steady rate of 5% per year. The firm's cost of common equity is 9% and its weighted average cost of capital is 7%. What is the per share value of the firm's common equity? The firm has 1,000 shares outstanding.

a. $21.88

b. $25.68

c. $17.05

d. $12.73

Reference no: EM133046285

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