Question
We are currently at the end of year t. You performed a thorough financial analysis of XYZ and forecast the following Free Cash Flows (FCF):
We are currently at the end of year "t". You performed a thorough financial analysis of XYZ and forecast the following Free Cash Flows (FCF): Year t+1: 352 million USD Year t+2: 385 million USD Year t+3: 407 million USD From year t+3 onward, you expect the FCFs to grow at a constant yearly rate of 4%. Through your analysis, you also determined that the appropriate Weighted Average Cost of Capital (WACC) for XYZ was 11%. Finally, you know that XYZ has 1000 million USD in debt and 100 million shares outstanding. 4) You are now contemplating the following project: buying 1 share of XYZ today at 35 USD on the exchange. What is the Net Present Value (NPV) of this project?
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