Using the schedule of cash flows and other information below, estimate the firm's value of operations...

Using the schedule of cash flows and other information below, estimate the firm's value of operations
by discounting the cash flows back to the present (time value of money formula)
Compute the value of operations a second way by using the NPV formula in Excel
FCFF	See cash flow schedule
WACC	18%
Debt	75	million
Number of shares	100	million
show excel formulas
Time	FCFF, millions
0
1	-2
2	10
3	18
4	30
5	52
6	56
7	59
8	61	growing at 2% per year
9
10

Expert Solution

Present value of operations

$149.58 million

Time	FCFF, millions	Present value	Horizon value	Net CF
0
1	-2	-1.69		-1.69
2	10	7.18		7.18
3	18	10.96		10.96
4	30	15.47		15.47
5	52	22.73		22.73
6	56	20.74		20.74
7	59	18.52		18.52
8	61	16.23	388.88	405.10
9				0
10				0
			Present value of operations	$149.58

jeff jeffy answered 11 months ago

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