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You have been asked to value GGP, Inc as a possible acquisition target. The firm is...

You have been asked to value GGP, Inc as a possible acquisition target. The firm is currently using 30% debt, has a levered beta of 2.2, and is subject to 21 percent corporate tax rate. The risk-free rate is 4 percent and the market risk premium is 8 percent. You expect that after 3 years (if still operating independently), the growth of the firm will be declining by 3.5 percent a year indefinitely. This also applies to the firm’s interest expenses. The forecasts for the FCF (in millions) for the next 3 years are 7, 10, and 6 (respectively). The forecasts for the interest expenses (in millions) are 3, 2.5 and 2 (respectively). What is the value of GGP, Inc based on the compressed adjusted present value approach?

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jeff jeffy answered 1 year ago
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