the data is as follows: expected long-run growth rate: 5%, cost of equity is 10%, forecast...

Free

90.2K

Verified Solution

Question

Finance

the data is as follows: expected long-run growth rate: 5%, costof equity is 10%, forecast horizon is 3 years, discounted (t=0)Terminal value = $500. Free cash flows to equity in year 1 is 100,year 2 is 150 and year 3 is 120. What is the value of the firm attoday, i.e., t = 0?

Answer & Explanation Solved by verified expert

4.1 Ratings (447 Votes)

Value of the firm as per the table below = 680.69

Discount rate	10.0000%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
-	0	-	-
100.000	1	90.91	90.91
150.000	2	123.97	214.876
120.000	3	90.16	305.034
500.000	3	375.66	680.69

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

the data is as follows: expected long-run growth rate: 5%, costof equity is 10%, forecast horizon is 3 years, discounted (t=0)Terminal value = $500. Free cash flows to equity in year 1 is 100,year 2 is 150 and year 3 is 120. What is the value of the firm attoday, i.e., t = 0?

the data is as follows: expected long-run growth rate: 5%, cost of equity is 10%, forecast...

Free

90.2K

Verified Solution

Question

Finance

the data is as follows: expected long-run growth rate: 5%, costof equity is 10%, forecast horizon is 3 years, discounted (t=0)Terminal value = $500. Free cash flows to equity in year 1 is 100,year 2 is 150 and year 3 is 120. What is the value of the firm attoday, i.e., t = 0?

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students