Question
if we have expected free cash flow in Year 1 is $X and we expect to grow at the annual rate of g% forever. The
if we have expected free cash flow in Year 1 is $X and we expect to grow at the annual rate of g% forever. The firm has $Y of debt outstanding bearing i% annual interest. The WACC is r%. What is the present value of the free cash flows in Year 0?
FCF = $X / (r-g) but what should we do with $Y of debt outstanding bearing i% annual interest?
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Public Finance
Authors: Richard W. Tresch
3rd Edition
012415834X, 9780124158344
