You Have Been Assigned the Task of Using the Free

question 27

Multiple Choice

You have been assigned the task of using the free cash flow model to estimate Petry Corporation's intrinsic value.Petry's WACC is 10.00%,its end-of-year free cash flow (FCF) is expected to be $150.0 million,the FCFs are expected to grow at a constant rate of 6.00% a year in the future,the company has $200 million of long-term debt plus preferred stock,and it has 50 million shares of common stock outstanding.What is Petry's estimated intrinsic value per share of common stock?

• A)$66.12
• B)$68.52
• C)$71.00
• D)$73.49

---

Definitions:

Gametes

Reproductive cells (sperm in males and eggs in females) that carry half the genetic information of an individual.

Tissues

Groups of similar cells that perform a common function in the body, such as muscle, nerve, epithelial, and connective tissues.

Organ

A collection of tissues within a living being that are specialized to carry out a particular task.

Nitrogenous Wastes

Waste products containing nitrogen that result from the metabolism of proteins and nucleic acids, such as urea and ammonia.