Question
Heavy Metal Corporation is expected to generate the following free cash flow over the next five years. Year FCF ($mln) 1 53 2 68 3
Heavy Metal Corporation is expected to generate the following free cash flow over the next five years.
Year FCF ($mln)
1 53
2 68
3 78
4 75
5 82
After year 5, free cash flows resemble a growing perpetuity and are expected to grow at the industry average of 4% per year. Assume a discount rate of 11%. Estimate the value of Heavy Metal.
Show all work please, no excel
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Options Futures and Other Derivatives
Authors: John C. Hull
10th edition
013447208X, 978-0134472089
