extensive enterprise inc. is expected to generate a free cash flow of $3,300.00 million this year,...

extensive enterprise inc. is expected to generate a free cash flow of $3,300.00 million this year, and the fcf is expected to grow at a rate of 21.40% over the following two years. After the third year, however, the fcf is expected to grow at a constant rate of 2.82% per year, which will last forever. If extensive enterprise inc.'s weighted average cost of capital is 8.46% what is the current total firm value of extensicve enterprise inc.?

10,260.11 Million

98,924.65 Million

79, 753.13 Million

95,703.76 Million

Expert Solution

rate	8.4600%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year	Cumulative cash flow
-	0	-	-
3,300.000	1	3,042.60	3,042.60
4,006.200	2	3,405.60	6,448.19
4,863.527	3	3,811.91	10,260.10
88,664.508	3	69,492.99	79,753.10

total value of firm = 79,753.13 million

jeff jeffy answered 2 years ago

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