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

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Definitions:

Biological Forces

Natural and inherent influences on human behavior and development, including genetics and physiological processes.

Development

The process of growth or progress, often referring to physical, psychological, or social evolution over time.

Erikson

Erik Erikson was a developmental psychologist and psychoanalyst known for his theory on psychological development of human beings, which outlines eight stages from infancy to adulthood.

Identity Crises

Periods of doubt and uncertainty about oneself that often involve questioning one's own identity and values, essentially a rephrased definition of identity crisis.