# Phoenix Corp. faltered in the recent recession but is recovering. Free cash flow has grown rapidly. Forecasts made at the beginning of 2016 are as follows: (\$ millions) 2017 2018 2019 2020 2021 Net income 1.0 3.5 6.2 6.7 7.0 Investment 1.0 2.5 2.7 2.9 2.9 Free cash flow 0 1.0 3.5 3.8 4.1 Phoenix’s recovery will be complete by 2021, and there will be no further growth in free cash flow. a. Calculate the PV of free cash flow, assuming a cost of equity of 10%. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) Present value \$ million b. Assume that Phoenix has 10 million shares outstanding. What is the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price per share \$ c. What is Phoenix’s P/E ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio

PV of clear capital run, is fitted by summation of give prize of overhead clear capital run and give prize of final prize is fitted in exceed and palliate shot supposing below:

Give prize of Clear capital run is \$34 darling.

b.

Total Number Of distribute Outstanding = 10 darling

Stock charge per distribute = \$34 darling/10 darling

= \$3.4

Hence Stock charge per distribute is \$3.4.

c.

P/E harmony in year 2016 that is beginging is fitted below using distribute charge of \$3.4 and earning of \$0.1 per distribute:

P/E harmony = \$3.4/\$0.1

= \$34

Hence P/E harmony of Phoenix Corp. is 34.