Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are trying to calculate the enterprise value of DCB Corp using a free cash flow model. To that end you have put together some
You are trying to calculate the enterprise value of DCB Corp using a free cash flow model. To that end you have put together some forecast for year 1 in the table below. Assume that free cash flows will grow at 1.5% in perpetuity and that the weighted average cost of capital of the firm (WACC) is 8%. Using this information, calculate the enterprise value of the firm. Express your answer in $-millions and round to two decimals (do not include the $-sign in your answer).
Sales | 159 |
Cost of sales | 58 |
Selling, general and administrative expenses | 7 |
Depreciation | 35 |
Increase in Net Working Capital | 5 |
Capital expenditures | 33 |
Marginal corporate tax rate | 23% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started