Answer:
Enterprise Value of Heavy Metal =$820
Share price of Heavy Metal = $9.53
Explanation:
Base on the scenario been describe in the question, we can use the following method to solve the given problem.
a)Terminal Value
= 82 / (14% – 4%) = $820
Enterprise Value of Heavy Metal
Terminal Value= 53 / 1.14 + 68/1.14^2 + 78 / 1.14^3 + (75 + 820) / 1.14^4 =$681
b) Share price of Heavy Metal
=(Enterprise value + cash – Debt) / Shares outstanding
Share price of Heavy Metal= (681 + 0 – 300)/40 = $9.53