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Brain Phone, Inc. has developed a new technology that will allow cell phone usage via cerebral implant. The company forecasts negative cash flows for 5
Brain Phone, Inc. has developed a new technology that will allow cell phone usage via cerebral implant. The company forecasts negative cash flows for 5 years, and then anticipates positives cash flows that are expected to grow at 4% forever. Investors require an 11% return. Below is the table of forecasted free cash flows. Year 1 - $ 3.80 Year 2 - $ 2.90 Free Cash Flows (millions) Year 3 Year 4 - $ 2.20 - $ 1.50 Year 5 - $ 0.80 Year 6 $ 3.20 a. What is the present value of the horizon value of the company? (Enter your answer in millions rounded to two decimal places.) PV (horizon value) million b. What is the present value of the firm's remaining free cash flows? (Enter your answer in millions rounded to two decimal places. Use a minus sign for a negative answer.) PV (free cash flows) million c. What is the total value of the firm? (Enter your answer in millions rounded to two decimal places.) Value of the firm million
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