3. Assume a corporation is expecting the following cash flows in the future: $-6 million in year 1, $8 million in year 2, $19 million in year 3. After year 3, the cash flows are expected to grow at a rate of 4% forever. The discount rate is 8%, the firm has debt totaling $55 million, and 9 million shares outstanding. What should be the price per share for this company?
3a. A company has $99 million in outstanding bonds, and 10 million shares of stock currently trading at $39 per share.The bonds pay an annual coupon rate of 8% and is trading at par. The company’s beta is 1, its tax rate is 40%, the risk-free rate is 2%, and the market risk premium is 4%. What is this firm’s WACC?