Answer:
$37.75
Explanation:
In order to find the stock price we need to calculate the firm value.
Firm value:
[tex]=\frac{FCF}{WACC-Growth}[/tex]
[tex]=\frac{9,000,000}{9\ percent-3\ percent}[/tex]
[tex]=\frac{9,000,000}{6\ percent}[/tex]
= $150,000,000
Therefore, the stock price is as follows:
[tex]=\frac{Firm\ value+Excess\ cash\ value}{Shares\ outstanding}[/tex]
[tex]=\frac{150,000,000+1,000,000}{4,000,000}[/tex]
[tex]=\frac{151,000,000}{4,000,000}[/tex]
= $37.75
Therefore, the price of Portage Bay stock is $37.75
