how to calculate enterprise value if we have free cash flow and will remain constant forever...
how to calculate enterprise value if we have free cash flow and will remain constant forever and WACC
Homework Answers
When free cash flow will remain constant forever then it is in the form of a perpetuity. The value of a perpetuity = constant annual amount/discount rate. Here the free cash flow amount is the constant annual amount and WACC is the discount rate.
Supposing that the company has no debt then enterprise value = Amount of constant free cash flow/WACC. For instance if the amount of free cash flow per year is $10,000 and WACC is 8% then enterprise value = $10,000/8% = $125,000
If the company has debt then use the free cash flow figure to calculate the unlevered free cash flow. It is also known as the free cash flow to the firm. Suppose that a company has an amount of unlevered free cash flow of $15,000 and this amount will remain constant in future. Its WACC is 9%. So its enterprise value = 15000/9% = $166,666.67
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how to calculate enterprise value if we have free cash flow and
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Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $11,610.00 million this...
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $11,610.00 million this year (FCF $11,610.00 million), and the FCF is expected to grow at a rate of 26.20 % over the following two years (FCFa and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26 % per year, which will last forever (FCFa). Assume the firm has no nonoperating assets. If Extensive Enterprise Inc.'s weighted average cost...
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A company's current year free cash flow is $250,000. Cash flows are expected to stay steady...
A company's current year free cash flow is $250,000. Cash flows are expected to stay steady forever. If their WACC is 8% and they have no debt, what is the value of their equity? Question 6 options: $2,000,000 $3,375,000 $3,125,000 or Not enough information provided to answer the question.
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The current Free cash flow to the firm is $185 million. The interest expense to the...
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QUESTION 20 Under the free cash flow approach to valuation: o share value equals the present...
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Jacksonville Co. had free cash flow of $200 million last year, and free cash flow is expected to grow at 5% next year and for all future years. Assuming the WACC is 15%, what is the firm's value of operations (in millions)? $2,316 $2,100 $1,896 $2,000 $2,206
Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $11,610.00 million this year (FCF $11,610.00 million), and the FCF is expected to grow at a rate of 26.20 % over the following two years (FCFa and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 4.26 % per year, which will last forever (FCFa). Assume the firm has no nonoperating assets. If Extensive Enterprise Inc.'s weighted average cost...
5. More on the corporate valuation model Extensive Enterprise Inc. is expected to generate a free cash flow (FCF) of $10,575.00 million this year (FCF, - $10,575.00 million), and the FCF is expected to grow at a rate of 22.60% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of 3.18% per year, which will last forever (FCF.). Assume the firm has no nonoperating assets. If...
Value of Operations: Constant FCF Growth EMC Corporation's current free cash flow of $400,000 and is expected to grow at a constant rate of 4.5%. The weighted average cost of capital is WACC = 12%. Calculate EMC's estimated value of operations. Do not round intermediate calculations. Round your answer to the nearest dollar. Horizon Value of Free Cash Flows Current and projected free cash flows for Radell Global Operations are shown below. Actual Projected 2019 2020 2021 2022 $618.520 $679.200...
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