Using the free cash flow approach, what should the company's stock price be today? (Harrison Corporation)
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Using the free cash flow approach, what should the company's stock price be today?
Today is December 31, 2002. The following information applies to Harrison Corporation:
-After-tax operating income [EBIT(1-T)] for 2003 is expected to be $950
-The company's depreciation expense for 2003 is expected to be $190 million
-The company's capital expenditures for 2003 are expected to be $380 million
-No change is expected in the company's net operating working capital
-The company's free cash flow is expected to grow at a constant rate of 4% per year
-The company's cost of equity is 13%
-The company's WACC is 9%
-The market value of the company's debt is $5.2 billion
-The company has 250 million shares of stock outstanding
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+950 After-tax operating income
+190 depreciation expense
-380 capital expenditures
+0 change in net operating working capital
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760 Free Cash Flow ...
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