how to calculate discount rate of factor at 9% wats the step to get the answer for this??

Show full question Answers F Finance expert Required Rate of Return = 9% Total Debt = 6000 million euros CALCULATION OF PRESENT VALUE OF CASH FLOWS (IN MILLION EUROS) PARTICULARS 2019 Cash Inflows (A) 2500 Cash Outflows (B) 1300 2020 2600 1400 202 270 170 1200 1200 100 0.917431 0.84168 0.7 1100.917 1010.01677. NET CASH FLOWS (A-B) Discount Factor @9% PRESENT VALUE OF CASH FLOWS CALCULATION OF PRESENT VALUE OF CASH FLOWS PARTICULARS Cash Inflows (A) Cash Outflows (B) 2020 2019 2500 1300 2600 1400 202 270 170 NET CASH FLOWS (A-B) 1200 1200 100 Discount Factor @9% 0.917431 0.84168 0.7 PRESENT VALUE OF CASH FLOWS 1100.917 1010.01677: VALUATION OF EQUITY CASE (1) When there is no growth Explicit Value = 1100.917 + 1010.016 + 772.1835 + 1168.902 = 4052.019 Million Dollars Terminal value at Year 2022 = Last year Cashflow / required rate of return = 1650/9% = 18333.33 Million Euors Present Value of Terminal Year = 18333.33/(1+9%)*4 = 12987.7955 Million Euros VALUE OF ENTERPRISE = Explicit Value + Present Value of Terminal Year = 4052.0185+ 12987.7955 = 17039.8140 Million Euors VALUE OF EQUITY = VALUE OF ENTERPRISE - VALUE OF DEBT = 17039.8140 - 6000 = 11039.8140 VALUE PER SHARE = VALUE OF EQUITY / OUTSTANDING NUMBER OF SHARES = 11039.8140 / 700 = 15.7712 Euros per share CASE (1) When there is no growth Explicit Value = 1100.917 + 1010.016 + 772.1835 + 1168.902 = 4052.019 Million Euros Terminal value at Year 2022 = Last year Cashflow(1+g) / (required rate of return-g) (GORDANS GRI =1650(1+4%)/(9%-4%) =1716/5% Home Search More