Shaq Fu Corporation is a fast-growing supplier of office products. Analysts project the following free cash...

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Shaq Fu Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows during the

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Answer 1

Answer #1

	WACC=	12.00%
Year	Previous year FCF	FCF growth rate	FCF current year	Horizon value	Total Value	Discount factor	Discounted value
1	0	0.00%	-24		-24	1.12	-21.4286
2	-24	0.00%	33		33	1.2544	26.3074
3	33	0.00%	44	941.6	985.6	1.404928	701.53061
	Long term growth rate (given)=	7.00%			*Value of Enterprise =*	*Sum of discounted value =*	706.41



Where
Total value = FCF + horizon value (only for last year)
Horizon value = FCF current year 3 *(1+long term growth rate)/( WACC-long term growth rate)
Discount factor=(1+ WACC)^corresponding period
Discounted value=total value/discount factor

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