firm free cash flow: 80 mill Cost of capital: 12% Terminal value: 5 Present value of cash flows for 1-5 years ? Present value of the terminal value in year 5? Enterprise value = PV of interim cash flows + PV of terminal value?

PROBLEM 6-14 Given Firm free cash flows (years 1 - 5) Cost of capital Terminal value multiple of cash flow (year 5) Solution a: Present value of cash flows for years 1-5 Solution b: Present value of the terminal value in year 5 Solution c: Enterprise Value = PV of interim cash flows + PV of Terminal Value $ 80 million 12% 5