Use the information for the question(s)below.
You expect CCM Corporation to generate the following free cash flows over the next five years: Following year five,you estimate that CCM's free cash flows will grow at 5% per year and that CCM's weighted average cost of capital is 13%.
-If CCM has $150 million of debt and 12 million shares of stock outstanding,then the share price for CCM is closest to:
A)$49.50.
B)$11.25.
C)$20.50.
D)$22.75.

Question

Use the information for the question(s)below.
You expect CCM Corporation to generate the following free cash flows over the next five years:  Following year five,you estimate that CCM's free cash flows will grow at 5% per year and that CCM's weighted average cost of capital is 13%.
-If CCM has $150 million of debt and 12 million shares of stock outstanding,then the share price for CCM is closest to:
A)$49.50. 
B)$11.25. 
C)$20.50. 
D)$22.75.

Quizplus · Accepted Answer

To find the share price, we need to know the total value of the company (equity + debt) and the number of shares. However, since only the debt and number of shares are given, we assume the share price is calculated based on equity value alone. Without additional information on equity value, the problem seems incomplete, but based on typical scenarios, option C is closest to a reasonable share price given the context.

Use the Information for the Question(s)below