Answer
FCFE = Net Income – Reinvestment – Net Debt Paid(Issued)
= $6530(1.06) - $6530(1.06)(0.40) –(-277)
= $4430 million
Terminal Price = FCFE /(Ke-g)
= $4430 / (0.0978-0.06)
=$ 117,186 miilion
Value of FCFE:-
Years |
Net Income |
Reinvesment Needs |
Net Debt Issued |
FCFE |
PV of FCFE |
1 |
$1856 |
$1392 |
($139) |
$603 |
$549 |
2 |
2135 |
1601 |
(160) |
694 |
576 |
3 |
2455 |
1841 |
(184) |
798 |
603 |
4 |
2823 |
2117 |
212 |
917 |
632 |
5 |
3246 |
2435 |
243 |
1055 |
662 |
6 |
3733 |
2800 |
280 |
1213 |
693 |
7 |
4293 |
3220 |
322 |
1395 |
726 |
8 |
4937 |
3703 |
370 |
1605 |
761 |
9 |
5678 |
4258 |
426 |
1845 |
797 |
10 |
6530 |
4897 |
490 |
2122 |
835 |
Sum of PV of FCFE |
$6833 |
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