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CORPORATE VALUATION Brandtly Industries invests a large sum of money in R&D; as a result, it retains and reinvests all of its

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Answer #1

Value of free cash flows = 3,000,000/(1.10) + 6,000,000/(1.10)2 + 11,000,000/(1.10)3 + 15,000,000/(1.10)4

= $26,195,615.05

b.Horizon Value = 15,000,000(1+8%)/(10%-8%)

= $810,000,000

c.Market value is equal to sum of present value of free cash flows

= 579,436,513.89

d.Value of operations = 579,436,513.89

Less: Value of Debt and Preferred Stock = $64,000,000

Value of Equity = $515,436,513.89

Number of shares = 7,000,000

Value per share = $73.63

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