Question
It is December 2023. Google has offered to buy your internet startup. The Google negotiators and you both agree on the following expectations. Year Expected
It is December 2023. 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) |
| 2024 | 120,000 |
| 2025 | 180,000 |
| 2026 | 270,000 |
| 2027 | 360,000 |
| 2028 | 450,000 |
After 2028, 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 12%.
You have bank loans worth $400,000 outstanding.
What is the terminal value, i.e., the present value of all free cash flows from 2029 to infinity expressed in 2028-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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Public Finance
Authors: Harvey S. Rosen
5th Edition
025617329X, 978-0256173291
