You Must Estimate the Intrinsic Value of Tsetseko Technologies' Stock

question 15

Multiple Choice

You must estimate the intrinsic value of Tsetseko Technologies' stock.Tsetseko's end-of-year free cash flow (FCF) is expected to be $17.50 million,and it is expected to grow at a constant rate of 7.00% a year thereafter.The company's WACC is 10.00%.Tsetseko has $125.00 million of long-term debt plus preferred stock,and there are 15.00 million shares of common stock outstanding.What is Tsetseko's estimated intrinsic value per share of common stock?

• A)$28.16
• B)$29.33
• C)$30.56
• D)$31.78

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Definitions:

Long Run

A period in economics during which all inputs, including capital and labor, can be varied, allowing for full adjustment to changes.

Output

The total value of goods and services produced by an economy over a specific time period.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Corporate Bureaucracy

The administrative system governing any large institution or organization, characterized by a hierarchy of authority, rigid division of labor, and strict regulations and procedures.