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Estimate the value of the company's common equity based on the cash flow below. The cash flow is not expected to grow in the
Estimate the value of the company's common equity based on the cash flow below. The cash flow is not expected to grow in the future beyond year 5. Current assets are equal to $10 million, current liabilities are $15 million, long-term debt is equal to $6 million, and preferred shares are equal to $2 million. Years (In $ millions) Cash flows for years 0 to 5 0 42. What is the terminal value? 3.4 1 4.6 2 5.7 3 8.3 4 43. What is the present value of terminal value? 44. What is the present value of current operations? 45. What is the net market value of common equity for the company? 9.1 5 Your required rate is equal to 13 percent. You estimate that the company's beta is equal to 5. The return from the market in the last ten years was equal to 10 percent. 10.2
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