Ting Lu is doing a valuation of the Mako Corporation. Mako has a 10% weighted average...

Ting Lu is doing a valuation of the Mako Corporation. Mako has a 10% weighted average cost of capital and a 30% income tax rate. Ting has forecasted the information in the table below to compute Mako’s free cash flow to the firm. Ting assumes that the FCFF that he estimates for year 4 will grow at 3% forever.

Year	1	2	3	4
EBIT	100	120	140	150
Depreciation	5	6	7	7.5
Capital expenditures	20	23	27	15
NWC investment	3	4	5	3

Based on this information, what is the intrinsic value of the Mako Corporation?

	A.	$1,401
	B.	$1,168
	C.	$1,522
	D.	$1,435

Expert Solution

B. $1,168

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 3 weeks ago

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