Question
You are analyzing the firm Aeroi Co Ltd. The firm's fiscal year ended 30 September 2020, and you must estimate Aeroi Co Ltd's value as
You are analyzing the firm Aeroi Co Ltd. The firm's fiscal year ended 30 September 2020, and you must estimate Aeroi Co Ltd's value as of 1 October. You have the following actual and forecast year-end free cash flows:
FCFF(2019)131000
FCFF(2020)124000
FCFF(2021)124000
FCFF(2022)124000
FCFF(2023)124000
In addition, you have estimated that the terminal growth rate should be 3%, the PE is 25, the beta is 1.23, the cost of equity is 11%, the after tax cost of debt is 6%, the weight of debt is 60%, and the risk-free rate is 2%.
What is the estimated Free Cash Flow to the Firm (FCFF) value?
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