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ABC Corp. has recently developed a solar panel capable of generating 200% more electircity than...

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Finance

ABC Corp. has recently developed a solar panel capable of generating 200% more electircity than any other solar panels on the market. As a result, ABC is expected to have an annual growth rate of 15% for the next 5 years. By the end of 5 years, competitors will have caught up to ABC and this ABC's growth rate will slow to 5% for the foreseable future. ABC has a WACC of 12%. The most recent cash flow was $1.75 million.

1. Calculate ABC's expected FCFs for t=1, t=2, t=3, t=4, and t=5.
2. What is the horizon value at t=5 (HV5)?
3. What is the present value of the horizon value?
4. What is the present value of the free cash flows expected at t=1, t=2, t=3, t=4, and t=5?
5. What is the value of ABC's operations at t=0?

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