Question
Swiss Valley Products distributes animal health care products to commercial livestock producers. A team of analysts from an investment bank forecasted the companys operating cash
Swiss Valley Products distributes animal health care products to commercial livestock producers. A team of analysts from an investment bank forecasted the companys operating cash flows, and capital expenditures. Year 0 figures are reported by the Company (actual data), but Year 1 to Year 6+ figures are analysts forecasts. Key assumptions include a weighted-average-cost-of-capital (WACC) of 15% and a perpetual growth rate of 5%. Given the following forecasts and assumptions, calculate the free cash flows for each year (in given cells) and calculate the value of Swiss Valley Products.
Forecasts Actual Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6+ $ Cash flow from 200,000 250,000 300,000 240,000 240,000 operating activities Capital expenditures Free cash flow (FCF) 200,000 175,000 220,000 60,000 150,000 150,000 50,000
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