Question
Expo Corporation is planning to purchase Simplicity Corporation. Simplicitys recent annual free cash flow (time 0) was $7 million. These free cash flows are expected
Expo Corporation is planning to purchase Simplicity Corporation. Simplicitys recent annual free cash flow (time 0) was $7 million. These free cash flows are expected to grow at 9 percent for the next 4 years, before leveling off to a growth rate of 4 percent for the foreseeable future. Both firms have a cost of capital of 10%. Simplicity has 5 million shares of stock. Calculate the value of Simplicity.
Question 18 8 pts Expo Corporation is planning to purchase Simplicity Corporation. Simplicity's recent annual free cash flow (time 0) was $7 million. These free cash flows are expected to grow at 9 percent for the next 4 years, before leveling off to a growth rate of 4 percent for the foreseeable future. Both firms have a cost of capital of 10%. Simplicity has 5 million shares of stock. Calculate the value of Simplicity. $181.2 million $144.4 million $196.3 million $206.2 million $134.5 millionStep by Step Solution
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Financial management theory and practice
Authors: Eugene F. Brigham and Michael C. Ehrhardt
13th edition
1439078106, 111197375X, 9781439078105, 9781111973759, 978-1439078099
