What is wards estimated intrinsic value per share

Reference no: EM13289509

Ward Pharmaceuticals is expected to generate free cash flow (FCF) of $150 million this year (FCF1 = $150 million), and FCF is expected to grow at a rate of 20% over the following two years (FCF2 and FCF3). After the third year, however, FCF is expected to grow at a constant rate of 5% per year, forever (FCF4).

1) If Ward's weighted average cost of capital (WACC) is 10.9%, what is Ward's current total firm value?

2) Ward's debt has a market value of $1,800 million and Ward has no preferred stock. If Ward has 80 million shares of common stock outstanding, what is Ward's estimated intrinsic value per share of common stock?

Reference no: EM13289509

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