In: Finance
VALUATION. For this and the next 2 questions: A company's FCFs are shown below. After Year 3, FCF is expected to grow at a constant rate of 5%. Cost of capital is 13%. Calculate the horizon value of the firm (i.e. HV3).
Year 1 |
Year 2 |
Year 3 |
|
FCF |
-$20 |
$30 |
$40 |
$525 million |
||
$500 million |
||
$323.08 million |
||
$397.37 million |
||
None of the above |
QUESTION 22
Calculate the value of the firm today (i.e. the PV of both the FCFs and the horizon value).
$525 million |
||
$500 million |
||
$323.08 million |
||
$397.37 million |
||
None of the above |
QUESTION 23
Suppose the firm's market value of debt is $50 million. What is your estimate of the firm's value of equity?
$330.54 million |
||
$347.37 million |
||
$447.36 million |
||
$397.37 million |