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The operation value (OV) is defined as following: Please prove the equation based on the definition of OV. 4. The operation value (OV) is defined
The operation value (OV) is defined as following:
Please prove the equation based on the definition of OV.
4. The operation value (OV) is defined as following: OV=t=1(1+WACCtFCFt=t=1(1+WACCtFCF0+t=1(1+WACCtFCFtFCF0=WACC2FCF0+t=1(1+WACCtFCFtFCF0Existing}{Growth Notes: OV - Operation Value WACC - Weighted Average Cost of Capital FCFt - Free Cash Flow in t-th year Please prove the following equation based on the definition of OV. OVexisting=WACC(1+g)WACCg,OVgrowth=WACC(1+g)g(1+WACC). Notes: g=FCFt/FCFt11 4. The operation value (OV) is defined as following: OV=t=1(1+WACCtFCFt=t=1(1+WACCtFCF0+t=1(1+WACCtFCFtFCF0=WACC2FCF0+t=1(1+WACCtFCFtFCF0Existing}{Growth Notes: OV - Operation Value WACC - Weighted Average Cost of Capital FCFt - Free Cash Flow in t-th year Please prove the following equation based on the definition of OV. OVexisting=WACC(1+g)WACCg,OVgrowth=WACC(1+g)g(1+WACC). Notes: g=FCFt/FCFt11Step by Step Solution
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