Question #69

Reading: Reading 21 Free Cash Flow Valuation

PDF File: Reading 21 Free Cash Flow Valuation.pdf

Page: 34

Status: Unattempted

Part of Context Group: Q69-71 First in Group
Shared Context
- Assuming a constant debt-to-asset ratio, the base year FCFE is closest to: A) €3.00. B) €3.80. C) €4.85.
Question
Using the stable-growth FCFE model as suggested by Analyst #1, the value of Hiller stock is closest to:
Answer Choices:
A. €51.58
B. €54.29
C. €57.00
Explanation
Value per share = (€3.80 × 1.05) / (0.12 − 0.05) = €57.00.
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