A financial analyst has produced the following free cash flow forecast for the MBA Corporation: Year Free
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Question:
A financial analyst has produced the following free cash flow forecast for the MBA Corporation:
Year | Free Cash Flow (FCF) |
1 | - $180,000 |
2 | - $190,000 |
3 | - $99,000 |
4 | $50,000 |
5 | $75,000 |
After year 5, the analyst estimates the FCFs will become stable and grow at 5 percent per year thereafter. The firm uses a 15 percent WACC to evaluate projects with a similar risk. What is your estimation of terminal value?
Refer to the previous question.
What is your estimation of the valuation of the firm?
$50,000 | ||
$85,963 | ||
$92,119 | ||
$247,369 | ||
$500,685 |
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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