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Option #2: Case: Electronix Inc. Valuation Electronix Inc. manufactures electronic products. The company's weighted average cost...

Option #2: Case: Electronix Inc. Valuation

Electronix Inc. manufactures electronic products. The company's weighted average cost of capital is 8 percent. The company forecasted the following free cash flows for the next 20 years:

Year         Free Cash Flows

1               $15,000,000

2               $16,200,000

3               $21,000,000

4               $23,000,000

5               $27,000,000

6-10         $25,000,000 per year

11-20 $21,000,000 per year

  • Prepare a valuation report for Electronix Inc. using the discounted cash flow approach.
  • Identify the accounts taken into consideration in the discounted cash flow method.
  • Compare the difference between future income method and the discounted future cash flow method.

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jeff jeffy answered 1 year ago
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