In: Finance
Company has the following cash flow stream.
CF1 = 357
CF2 = 653
CF3 = 804
CF4 = 963
Cash flow is expected to be constant after year 4, with a growth rate of 4%. If the WACC is 10%, what is the Value of Operations (Firm Value) - Vop0 today?
(Hint : The answer in my version is 14,370.44
Value of operations is equal to the present value of all future free cash flows
= 357/(1.1) + 653/(1.1)^2 + 804/(1.1)^3 + 963/(1.1)^4 + 963*(1.04)/(1.1)^4(10%-4%)
= $13,526.87