Question
It is December 2020. Google has offered to buy your internet startup. The Google negotiators and you both agree on the following expectations. Year Expected
It is December 2020. Google has offered to buy your internet startup. The Google negotiators and you both agree on the following expectations.
| Year | Expected free cash flow (end of year) |
| 2021 | 120,000 |
| 2022 | 180,000 |
| 2023 | 270,000 |
| 2024 | 360,000 |
| 2025 | 450,000 |
After 2025, cash flows are expected to grow by 2% per year. Based on the riskiness of your industry, you think that your weighted average cost of capital is 17%.
You have bank loans worth $400,000 outstanding.
What is the terminal value, i.e., the present value of all free cash flows from 2026 to infinity expressed in 2025-dollars?
What is the total value of the company?
What is the value per share of common stock if you have 100,000 shares outstanding?
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Financial Management For Public, Health, And Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
6th Edition
150639681X, 978-1506396811
