ZuoTi.Pro
Question

Company A has a Free Cash Flow (FCF) of $62 million.  Their growth rate is 7% and cost of equity is 10%.&nbsp...

  1. Company A has a Free Cash Flow (FCF) of $62 million.  Their growth rate is 7% and cost of equity is 10%.  What is the value of the Company?
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Value of company = FCF1 / required rate - growth rate

Value of company = [62 (1 + 7%)] / 0.1 - 0.07

Value of company = [66.34] / 0.03

Value of company = $2,211.33 million

0 0
Add a comment
Know the answer?
Add Answer to:
Company A has a Free Cash Flow (FCF) of $62 million.  Their growth rate is 7% and cost of equity is 10%.&nbsp...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 7. Company A has a Free Cash Flow (FCF) of $62 million. Their growth rate is...

    7. Company A has a Free Cash Flow (FCF) of $62 million. Their growth rate is 7% and cost of equity is 10%. What is the value of the Company? er en ganse m an har growth in the end

  • 7. Company A has a Free Cash Flow (FCF) of $62 million. Their growth rate is...

    7. Company A has a Free Cash Flow (FCF) of $62 million. Their growth rate is 7% and cost of equity is 10%. What is the value of the Company? 8. Company Z provides financial services for its customers. They have debt of $25 million of which they pay $1.8 million per annum in interest expense. They have $105 million in common stock at 6%. The company's Beta is 1.1 and the risk-free rate is 2.5%. The tax rate is...

  • AK Company A expects to have free cash flow (FCF) this year of $1,000,000. FCF is...

    AK Company A expects to have free cash flow (FCF) this year of $1,000,000. FCF is expected to grow at a constant rate of 3%. If Company A has a Weighted average cost of capital of 7% (required rate), debt of $9,000,000, no preferred stock and 400,000 shares of common equity outstanding, what is the value per share? 58.20 40.00 26.88 25.00 65.75

  • You estimate the following free-cash-flow (FCF) data for LipCo (in millions). The firm’s long-term FCF growth...

    You estimate the following free-cash-flow (FCF) data for LipCo (in millions). The firm’s long-term FCF growth rate will be 3% per year after year three and the firm’s cost of capital is 9%. LipCo has no debt and 8 million shares outstanding. Using the corporate valuation model, what is the intrinsic price of one share of LipCo? (Round at the end) 9. You estimate the following free-cash-flow (FCF) data for LipCo (in millions). The firm's long-term FCF growth rate will...

  • help!! 4. Corporate Valuation Model ABC Corp. just reported Free Cash Flow (FCF) of $235.69 million...

    help!! 4. Corporate Valuation Model ABC Corp. just reported Free Cash Flow (FCF) of $235.69 million Managers expect that FCF will continue to grow at a constant rate of 4%. The firm also has some short-term marketable securities worth $50 million that are considered non-operating assets, so are not included in free cash flow. The firm has short-term debt in the form of notes payable of $150 million, long term debt of $500 million, and has issued preferred stock worth...

  • Widget Corp. is expected to generate a free cash flow (FCF) of $7,555.00 million this year (FCF₁ = $7,555.00 million), a...

    Widget Corp. is expected to generate a free cash flow (FCF) of $7,555.00 million this year (FCF₁ = $7,555.00 million), and the FCF is expected to grow at a rate of 20.20% over the following two years (FCF₂ and FCF₃). After the third year, however, the FCF is expected to grow at a constant rate of 2.46% per year, which will last forever (FCF₄). Assume the firm has no nonoperating assets. If Widget Corp.’s weighted average cost of capital (WACC)...

  • Please show with all steps Free Cash Flow Model 2012 $14,869.00 Free Cash Flow FCF Growth...

    Please show with all steps Free Cash Flow Model 2012 $14,869.00 Free Cash Flow FCF Growth 2013 $13,345.00 - 10.25% 2014 $12,685.00 -4.95% 2015 $13,104.00 3.30% 2016 $12,934.00 -1.30% 2017 Growth Rate $12,951.00 0.13% -2.72% Geometric Average -2.61% Arithmetic Average Equity Beta Debt/Equity Tax Rate Risk-Free Rate Market Risk Premium 0.8 2.26 21% 2.00% 10.00% Asset Beta Required Rate of Return using CAPM 0.2872 4.87% Value of Firm using Free Cash Flow Model with Geometric Average: Value of Firm using...

  • Problem #1 Free Cash Flow Model ABC Company has an equity beta of 1.72 and a...

    Problem #1 Free Cash Flow Model ABC Company has an equity beta of 1.72 and a tax rate of 35%. What is the asset beta if the debt to equity ratio is 40%? Using the answer from above, calculate the discount rate if the risk free rate is 2.75% and the market risk premium is 6.15%? ABC Company had an EBIT last year of $15.6 million. Depreciation expense was $1.45 million. In other areas, ABC spent $1.75 million on capital...

  • We know that Costco’s free cash flow (FCF) is $3,330 million, the financial liability is $22,977...

    We know that Costco’s free cash flow (FCF) is $3,330 million, the financial liability is $22,977 million, the liquid asset is $7,259 million, the shares outstanding is 440 million, and the stock price per share is $302.62. According to the consensus of financial analysts following Costco, the WACC is 8%, and the 5-year growth rate of FCF is about 9.3%. What is the market’s expectation for the long-term growth rate of Costco’s FCF? A. 5.17% B. 4.80% C. 6.34% D....

  • if this years free cash flow is 500 million and the growth rate of the cash...

    if this years free cash flow is 500 million and the growth rate of the cash flow is 5% with a required return of 10%, the value of operation is a little over 10 billion. T/F

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT