Mo, an analyst with SER, has gathers the following info about BSM Current year’s operating cash flow $5MM Cost of equity 15% WACC 12.4% Estimated long term growth rate 6% Given this info, Mo’s best estimate of BSM’s intrinsic value would be closest to: Answer: $82.81MM No clue on this one at all.
the answer is (cf/wacc-g)+g = 5m/(12.4%-6.4%) + 6%
cf*(1+g)/(wacc-g) just like div. model, but here u assume the op. cf as the div. Edit: 5*1.06/(.124-.06) = 5.3/.064=82.81
have never seen this before…which los?