Question
You are considering purchasing Firm A. Firm A most recently generated free cash flow (FCF) of $200M last year, and you expect that to grow
You are considering purchasing Firm A. Firm A most recently generated free cash flow (FCF) of $200M last year, and you expect that to grow by 8% this year and for 3 years after that. After that, you estimate that Firm A will continue to grow at 5.5% in perpetuity. Firm A’s cost of capital is 11%. For simplicity, assume that all past cash flows have been paid out as dividends.
What is the expected free cash flow (FCF) at the end of 5 years from now?
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The expected free cash flow FCF at the end of 5 years ...
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Fundamentals of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi
1st canadian edition
978-0133400694
