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Problem 11-6 Value of Operations Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $90,000 for the next
Problem 11-6 Value of Operations Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $90,000 for the next 2 years, respectively; after the second year FCF is expected to grow at a constant rate of 5%. The company?s weighted average cost of capital is 14%. a. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest dollar. b. Calculate the value of Brooks? operations. Round your answer to the nearest cent
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