Parminder Partners Is Expected to Generate Free Cash Flows of $4

question 12

Multiple Choice

Parminder Partners is expected to generate free cash flows of $4 million per year for the next 5 years,after which they are expected to grow at a rate of 3% per year.The firm currently has $2 million of cash,$7 million of debt,and a cost of capital of 8%.If the firm has 10 million shares outstanding,what is Parminder's expected current share price?

• A)$6.71
• B)$6.29
• C)$6.55
• D)$7.21
• E)$6.51

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