Original Question: Hello. As part of my group project, I am tasked to Calculate and interpret the net present value (NPV) of Target's and JCPenny's annual free cash flow (FCF) for a 5 year period (nper) taking into account constant growth rate (which will need to be calculated), and a discount rate that is equal to the weighted average cost of capital (WACC), which is 7%. I have been reading Investopedia regarding this subject and how to formulate my response, but I am not quite grasping it. Where do I need to go to get the information I need for Target and JCPenny and how do I figure out their NPV of their FCF for a 5 year period with a constant growth rate and WAAC of 7%. Any information would help me out. Thank you.

Answer to my question: You can refer to The Wall Stree Journal You can obtain annual free cash flow information for 5 year period for these two companies. After obtaining free cash flow from Year 1 to 5 , you should calculate the annual growth rate of cash flow. Assume annual constant growth rate=g You can obtain g using the following formula: (1+g)^4=(Free cash flow of year 5)/(Free Cash flow of year1) After you obtain the value of g, You can calculate NPV at year 0 , by using the following formula: NPV=(Free Cash flow in year1)/(R-g) R=Cost of capital=WACC

Need follow up help: Ok. Thank you for the info. I went to Wall Street Journal and pulled the financials for Target. I looked at the cash flow section and went down all the way down to Free Cash Flow (FCF) section. According to the statement that gives a 5 year trend, Year 1 or 2013 is 2,048 in millions. Year 5 or 2017 is 3,889 in millions. If getting the constant growth rate of "g" by utilizing the formula [2] (1+g)^4=3889/2048 =(1+g)^4=1.90 Am I on the right track? Can you help me solve for "g"?

Free Cash Flow 3,889 4,406 2.653 4,634 Free Cash Flow Growth -11.73% 66.08% -42.75% 126 27%