Your firms free cash flow per year is as follows: Year 1 = ($120,000) Year 2 =

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Your firm’s free cash flow per year is as follows:

Year 1 = $$120,000$

Year 2 = $$140,000$

Year 3 = $$150,000$

Year 4 = $$160,000$

Year 5 = $$170,000$

The cost of capital is 20 percent.

a. What would the terminal value be at year 5 if there is no growth expected beyond the fifth year?

b. What is the present value of the free cash flow for the first five years?

c. What is the value of the firm today?

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Entrepreneurial Financial Management An Applied Approach

ISBN: 9781000650488

5th Edition

Authors: Jeffrey R Cornwall, David O Vang, Jean M Hartman

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Question Posted: May 12, 2024 08:13 AM

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Your firms free cash flow per year is as follows: Year 1 = ($120,000) Year 2 =

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Step by Step Answer:

a To calculate the terminal value at year 5 with no growth beyond the fifth year we use the formula ...View the full answer

Entrepreneurial Financial Management An Applied Approach

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