Homework Answers
Free cash flow next year = EBIT(1-Tax rate)+Depreciation – Capital expenditure – Increase in working capital
= 2,000,000(1-35%)+290,000-290,0000-46,000
= $1,254,000
Enterprise value = Free cash flow next year/(WACC – growth rate)
= 1,254,000/(10%-6%)
= $31,350,000
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