Corporate Valuation is a fundamental concept in finance. A corporate valuation model is used to determine value of a firm with no history of dividends, or divisions of a larger firm. A firm's value is determined by its abiity to generate cash flow both now and in the future. The corporate model first calculates the firm's free cash flows, then finds their present values to determine the firm's value: Here, EBF is earnings before interest and taxes; FCFt is the free cash flow generated in year t before any payments are made to any investors, so it must be used to compensote common stockholders, preferred stockholders, end bondhalders; WACC is weighted average cost of all the firm's capital, such as debt, preferred stock, and common equity. Free cash flows are forecasted for 5 to 10 years, after which it is assumed that the company reaches its horizon date. That is, the final expliotly forecasted FCF will grow ot some long-run constant rate. You can use the following formula to calculate the market value of the company's operations as of that dote: =WAC-MierHCVII Market value of company = Market valuc of company'k operations + Market ralue of aurnpany's nane, operations as of that date: Horizon tulue of company =VCmpepsiponainsati-N= PVof expected fufure froe mah flors Markctnalucofcompany=MarketvalucofcompanyAoperations+Marketcalueofcompanysnong, Suppose your company's WACC =12% and you know thot the free cash flow of your company next year is going to be FCFi=$13.85 and then FCF is expected to grow at 6%, Then the FCF2 is and the company's horizon value in one year is This means that the firm's value todoy is