Question
Calculate FINAL VALUATION from the following details: PV of FCFF (initial period) + PV of TERMINAL VALUE WACC 10% ii) Growth Rate 7% Apply the
- Calculate FINAL VALUATION from the following details:
PV of FCFF (initial period) + PV of TERMINAL VALUE
- WACC 10% ii) Growth Rate 7%
Apply the correct discount factor.
| Free cash flows |
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| Year 1 | Year 2 | Year 3 | ||||||
| FCFF |
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| Profit after tax |
| 100 | 150 | 250 | ||||||
| Depreciation & Amortisation |
| 20 | 18 | 16 | ||||||
| Interst * (1 - Tax Rate) |
| 9.95 | 8.62 | 6.63 | ||||||
| Normal Working capital Investment |
| 8 | 10 | 15 | ||||||
| Normal Fixed Capital Investment |
| 15 | 20 | 25 | ||||||
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| FCFF = |
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| ||||||
| Discount Factor |
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| |||||
PV of FCFF (initial period) =
| Terminal Value of FCFF 4th year |
|
|
|
| 8,297.28 |
| Discount Factor 4thyear |
|
| 0 |
|
|
PV of TERMINAL VALUE =
VALUATION =
Discount Factor Year 1 Year 2 Year 3 Year 4
At 7% 0.934579 0.873438 0.816297 0.762895
At 10% 0.909091 0.826446 0.751315 0.683013
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Handbook Of Research On Theory And Practice Of Financial Crimes
Authors: Abdul Rafay
1st Edition
1799855678, 978-1799855675
