Question Workspace

• Check My Work

• eBook

Problem Walk-Through

Unlevered Value

Richter Manufacturing has an 8% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 5% rate after Year 3.

	Year 1	Year 2	Year 3
FCF	$800	$830	$890

1. What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar.

   $

2. What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.

   $