Finance help pls!?

Question

You must estimate the intrinsic value of Gallovits Technologies’ stock. Gallovits’s end-of-year free cash flow (FCF) is expected to be $20 million, and it is expected to grow at a constant rate of 8.5% a year thereafter. The company’s WACC is 11%. Gallovits has $200 million of long-term debt plus preferred stock, and there are 30 million shares of common stock outstanding. What is Gallovits' estimated intrinsic value per share of common stock?

Answer 1

For the lack of a better rate of return on common equity, we can use WACC to calculate the value per share.

The FCF/Share is 0.66667

Price = D1/(r-g)

Price = 0.6667 (0.11-0.085) = 26.67