Gonzales Corporation Generated Free Cash Flow of $88 Million This

question 46

Multiple Choice

Gonzales Corporation generated free cash flow of $88 million this year.For the next two years,the company's free cash flow is expected to grow at a rate of 8%.After that time,the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year.If the weighted average cost of capital is 10% and Gonzales Corporation has cash of $100 million,debt of $300 million,and 100 million shares outstanding,what is Gonzales Corporation's expected current share price?

• A)$16.42
• B)$13.85
• C)$14.42
• D)$18.42

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Definitions:

Supervising

The process of overseeing, directing, and managing the work and performance of individuals or teams to achieve organizational objectives.

Utilization Rates

The ratio of actual time used to the potential time available for production, indicating the efficiency of resource use.

Managerial Accounting

A field of accounting focused on providing financial information within a company to assist in decision-making and strategy development.

Financial Accounting

The field of accounting concerned with the summary, analysis, and reporting of financial transactions pertaining to a business.