You Must Estimate the Intrinsic Value of Tsetseko Technologies' Stock

question 15

Multiple Choice

You must estimate the intrinsic value of Tsetseko Technologies' stock.Tsetseko's end-of-year free cash flow (FCF) is expected to be $17.50 million,and it is expected to grow at a constant rate of 7.00% a year thereafter.The company's WACC is 10.00%.Tsetseko has $125.00 million of long-term debt plus preferred stock,and there are 15.00 million shares of common stock outstanding.What is Tsetseko's estimated intrinsic value per share of common stock?

• A)$28.16
• B)$29.33
• C)$30.56
• D)$31.78

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Definitions:

Impediments To Bargaining

Factors that obstruct or hinder the negotiation process between parties, potentially leading to inefficiencies or failure to reach an agreement.

Liability Rules

Legal principles that define the obligations of parties to compensate for damages or losses they have caused.

Compensate

To make amends or give an equivalent to someone for loss, damage, or suffering experienced.

Free-Rider Problem

A situation where individuals consume a good or service without paying for it, especially in the context of public goods.