Question

18 5 points You are trying to estimate the value of the XYZ Inc. company, as of the end of 2018. The after-tax cashflow from assets (FCFF) for the year ending 2018 is $145 million. The estimated WACC is 10%. What comes closest to the current value of the firm XYZ if the cashflow from assets are expected to grow at a constant rate of 2% in the future? O 0 0 0 0 1849 million 1479 million 2113 million 1813 million 1450 million

Answer 1

The value of the firm is calculated below:

$Firm\, value=145\, million\times \left ( \frac{1+0.02}{0.10-0.02} \right )$

$Firm\, value=145\, million\times 12.75$

This is almost goes to 1,849 million.

Therefore, the correct option is "a".