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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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Answer #1

Value of Equity = Free Cash Flow / WACC

= $250,000 / 0.08

Value of Equity = $3,125,000

Option C is correct

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