Suppose Yon Sun Corporation’s free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future. If the weighted average cost of capital is 15%, what is the firm’s value of operations, in millions?
The amount is computed as shown below:
= [ Current FCF x (1 + growth rate) ] / (WACC - growth rate)
= [ $ 100 million x 1.05 ] / (0.15 - 0.05)
= $ 105 million / 0.10
= $ 1,050 million
Suppose Yon Sun Corporation’s free cash flow during the just-ended year (t = 0) was $100...
Suppose Yon Sun Corporation's free cash flow during the just-ended (t = 0) year was $150 million, and FCF is expected to grow at a constant rate of 4% in the future. If the weighted average cost of capital is 13%, what is the firm's value of operations, in millions? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in...
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