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In our lecture example shown below. PV(free cash flows from Year 4 to Infinity and beyond) PV means the value at Year not Year 1)
In our lecture example shown below. PV(free cash flows from Year 4 to Infinity and beyond) PV means the value at Year not Year 1) (Hint The lecture slides computed the P/FCFS in Year 5 and beyond, but this question asks PV/FCS in Year 4 Year 1 2 4 0 (10,500) 3 1,200 (5.500) 800 1,300 Free cash Flow (years-4) Continuation value (Year 5 and beyond) Free cash flow 27,300 (10,500) (5,500) 800 1,200 28,600 27.300/1.10^4 1,27,300/1.103 C 21.600/1.100 0.28.600/1104
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