Conundrum Mining Is Expected to Generate the Above Free Cash

question 24

Multiple Choice

Conundrum Mining is expected to generate the above free cash flows over the next four years,after which they are expected to grow at a rate of 5% per year.If the weighted average cost of capital is 12% and Conundrum has cash of $80 million,debt of $60 million,and 30 million shares outstanding,what is Conundrum's expected current share price?

• A)$10.84
• B)$13.72
• C)$16.16
• D)$16.25

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Definitions:

Minutes

A unit of time equal to one-sixtieth of an hour or sixty seconds, commonly used to measure duration.

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect in a particular test, used as a starting point for experimentation.

Alternative Hypothesis

A hypothesis that suggests there is a difference between two or more sets of data, contrasting the null hypothesis.

Average

The numerical value obtained by dividing the sum of all values in a set by the number of values in the set.