Question
Free Cash Inc.'s cost of capital is estimated to be10percent. The free cash flows to the firm(FCFF)is estimated to be $17,800,$23,000,and $28,700in each of the
Free Cash Inc.'s cost of capital is estimated to be 10 percent. The free cash flows to the firm (FCFF) is estimated to be $17,800, $23,000, and $28,700 in each of the next three years. Free cash flows beyond year 3 are estimated to grow at an annual rate of 5 percent. Appling the growing perpetuity formula, the terminal value of Free Cash Inc of year 3 is estimated to be $602,700. Free Cash Inc.'s current value of existing debt is $58,388. Estimate the value of the equity of Free Cash Inc. by applying the free cash flow to the firm method.
The value of the equity of Free Cash Inc by applying the free cash flow to the firm method is estimated to be $ (Round to the nearest dollar)
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Financial Management Concepts and Applications
Authors: Stephen Foerster
1st edition
013293664X, 978-0132936644
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