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Imagine a company that has never and will never pay any dividend to its common shareholders. The weighted average cost of capital is 7.4%. The
Imagine a company that has never and will never pay any dividend to its common shareholders. The weighted average cost of capital is 7.4%. The number of outstanding stocks is 1 M and the market value of the Debt is $30 M. Free cash flows are expected to grow at a 10% rate for 3 years and 5% thereafter. The Free cash Flows for the next 4 years are then FCF1=$3 M; FCF2=$3.3 M; FCF3= $3. 63 M; FCF4= $3.81 M. What is the Value of the firm (VF)?
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