Question
7)The terminal value is always placed in the last year of a DCF forecast. If the terminal value is placed in year 2024 (as it
7)The terminal value is always "placed" in the last year of a DCF forecast. If the terminal value is placed in year 2024 (as it is in Case 2, for P&G), this value represents __________________________.
a) The present value of Free Cash Flows to the Firm (FCFF) from 2024 through infinity, discounted at "g", the constant growth rate.
b) The present value of Free Cash Flows to the Firm (FCFF) from 2025 through infinity, discounted at the WACC, weighted average cost of capital.
c) The present value of Free Cash Flows to the Firm (FCFF) from 2025 through infinity, discounted at "g", the constant growth rate.
d) The present value of Free Cash Flows to the Firm (FCFF) from 2024 through infinity, discounted at the WACC, weighted average cost of capital.
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Financial Theory and Corporate Policy
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
4th edition
321127218, 978-0321179548, 321179544, 978-0321127211
