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Micro Bike Company has short term investments of $50, debt of $1,500, and preferred stock of $200. The equity of the Micro Bike has 100 shares. The 4....
Micro Bike Company has short term investments of $50, debt of $1,500, and preferred stock of $200. The equity of the Micro Bike has 100 shares. The 4.8% is the expected constant growth rate from 2019 and going forward. The company forecasts the following: show work
2015 2016 2017 2018 2019
Free Cash Flow $30 $90 $130 $210 $220
Target WACC 10.0% 10.0% 10.0% 10.0% 10.0%
Free Cash Flow Growth 15% 200% 44.4% 61.5% 4.8%
Based upon the above answer the following:
a) What is the Present Value of Free Cash Flows?
b) What is the Present Value of the Horizon Value?
c) What is the estimated intrinsic value of the equity?
d) What is the estimated intrinsic stock price?
