Question
Today is January 31, 2018. You forecasted the following cash flows (in millions) for a firm: Cash flow from operations January 31, 2019 $4,822.32 January
Today is January 31, 2018. You forecasted the following cash flows (in millions) for a firm:
| Cash flow from operations | |
| January 31, 2019 | $4,822.32 |
| January 31, 2020 | $5,342.00 |
| January 31, 2021 | $4,525.11 |
| Cash investment in operations | |
| January 31, 2019 | $800.44 |
| January 31, 2020 | $913.21 |
| January 31, 2021 | $874.14 |
In addition, you are given the following data:
| Net debt | |
| January 31, 2018 | $342.11 |
and
| Free cash flow growth after 2021 | 3.00% |
| Required return | 10.00% |
What is the equity value of the firm (in millions) using Discounted Cash Flow model? Hint: First, calculate the free cash flows and discount the free cash flows. Finally, subtract the net debt to obtain equity value.
A. $46,434.11
B. $48,111.02
C. $50,079.02
D. $52,515.77
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Financial Statement Analysis
Authors: Martin S. Fridson, Fernando Alvarez
5th Edition
1119457149, 978-1119457145
