Question
A firm forecasts its free cash flow will be $100,000 one year from today. Free cash flows are expected to grow at 4% for the
A firm forecasts its free cash flow will be $100,000 one year from today. Free cash flows are expected to grow at 4% for the following 4 years. At the forecast horizon, the firm's growth results in an EBITDA forecast of $650,000. If its EBITDA multiple is 11 and the discount rate is 6%, what is the value of the firm? a. 5.8 million
b. 5.3 million
c. 6.6 million
d. 4.9 million
e. 5 million
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Financial Markets And Institutions A Modern Perspective
Authors: Anthony Saunders, Marcia Millon Cornett, Marcia Cornett
2nd Edition
007294109X, 978-0072941098
