Question
(7-14) Declining FCF Growth Valuation Brushy Mountain Mining Companys coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year,
(7-14)
Declining FCF Growth Valuation
Brushy Mountain Mining Companys coal reserves are being depleted, so its sales are falling. Also, environmental costs increase each year, so its costs are rising. As a result, the companys free cash flows are declining at the constant rate of 4% per year. If its current free cash flow (FCF0) is $6 million and its weighted average cost of capital (WACC) is 14%, what is the estimated value of Brushy Mountains value of operations?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
10th edition
978-1337902571, 1337902578, 978-1337911054, 1337911054, 978-0324272055
