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Consider a company that is projected to generate revenues of $211 million next year. Analysts...

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Finance

Consider a company that is projected to generate revenues of $211 million next year. Analysts expect revenues to grow at a 4.3% annual rate for the following two years (until the end of year 3) and then at a stable rate of 2.5% in perpetuity. If the company is expected to have a gross margin of 75%, operating margin of 52%, net margin of 25%, tax rate of 17.3%, and reinvestment rate of 36%, what is its expected free cash flows in four years from today? Answer in millions, rounded to one decimal place (e.g., $2,315,612 = 2.3).

Hint: This is NOT a valuation question. It's asking you for FCFF4. First find Revenues at t=4 by extrapolating from Revenues at t=1 using the two growth rates. Then, go from revenues at t=4 to FCFF at t=4.

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