Value of Operations of Constant Growth Firm EMC Corporation has never paid a dividend. Its current...
Value of Operations of Constant Growth Firm
EMC Corporation has never paid a dividend. Its current free cash flow of $450,000 is expected to grow at a constant rate of 4.8%. The weighted average cost of capital is WACC = 12%. Calculate EMC's estimated value of operations. Round your answer to the nearest dollar.
Homework Answers
estimated value of operations=Free cash flow for next period/(WACC-Growth rate)
=(450,000*1.048)/(0.12-0.048)
which is equal to
=$6550000
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Value of Operations of Constant Growth Firm
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