Conundrum Mining Is Expected to Generate the Above Free Cash

question 13

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 11% and Conundrum has cash of $85 million, debt of $65 million, and 30 million shares outstanding, what is Conundrum's expected current share price?

• A) $12.61
• B) $16.40
• C) $20.18
• D) $20.81

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Definitions:

Soaps

Salts of fatty acids used in cleaning and as surfactants, produced from the reaction of fats with a strong base.

Soaps

Salts of fatty acids, created through the saponification process, used primarily for cleaning.

Hydrophobic

Hydrophobic refers to substances that repel water, often characterized by nonpolarity and insolubility in water.

Soap

Salt of fatty acids that are primarily used for cleaning and lubrication, formed by the reaction between an alkali and a fat or oil.