A1

The present value of the company based on the given interest rate of 5% for 2020, 2021, 2022, the provided total Free Cash Flows by the Johnson & Johnson Annual Report, in millions, is $58,789.42

A2.

The risk of the company has changed based on an unanticipated decrease in the Free Cash Flows by 10% annually during the years 2020, 2021, and 2022. Because of the 10% decrease the present value is now $52, 910.47 million.

Question:

A potential buyer has offered to buy Johnson & Johnson in three years with its interest being 5%. Based on the initial present value of $58,789.42 million in A1, a reasonable amount for the buyer to pay for the company after three years' time is by what amount? If using the Future Value formula

(FV) formula, FV = PV (1 +i)^n to calculate the value of the company.

***Please plug in the values into the formula for me to better understand it. Thanks!***