Question
A company forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at
A company forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?
a. $158
b. $167
c. $175
d. $184
e. $193
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Finance Directors Handbook
Authors: Glynis D Morris, Sonia McKay, Andrea Oates
5th Edition
1566768691, 978-1566768696
