Question
Kim is projecting LTG, Inc.'s cash flows using the percentage of sales method. She projects that the sales and the NOPAT for the next 3
"Kim is projecting LTG, Inc.'s cash flows using the percentage of sales method. She projects that the sales and the NOPAT for the next 3 years will be according to the table below and after that both the sales and the NOPAT will grow at 5% per year forever. Year 0 represents the firm's most recent year. The firm's Net PPE is expected to be at 20% of the same year's sales. The operating NWC is projected at 6% of the same year's sales. What is the value of the firm if the cost of capital is 10%?
Year | 0 | 1 | 2 | 3 |
Sales | 1000 | 1000 | 1200 | 1100 |
NOPAT | 200 | 220 | 250 | 240 |
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Entrepreneurial Finance
Authors: Philip J. Adelman; Alan M. Marks
6th edition
9780133099096, 133140512, 133099091, 978-0133140514
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