Seaman had a FCFE of $4.6B last year and has 113.2M shares outstanding. Seaman's required return on equity is 11.6%, and WACC is 10.4%. If FCFE is expected to grow at 5% forever, the intrinsic value of Seaman's shares is
A. $646.48.
B. $64.66.
C. $6,464.80
D. $6.46.
A. $646.48.
$4.6B/113.2M = $40.636 FCFE per share; 40.636 × 1.05 = 42.6678; 42.6678/(.116 .05) = 646.48.
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