FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are using DCF to value a firm. next year you predict free cash flows of 1 million dollars. the second-year free cash flows are

You are using DCF to value a firm. next year you predict free cash flows of 1 million dollars. the second-year free cash flows are estimated at 1.3 million. the next year after that you feel free to cash flows will grow forever at 3%. if you have a discount rate of 3%, what is the value of this firm?

Step by Step Solution

★★★★★

3.28 Rating (157 Votes )

There are 3 Steps involved in it

Step: 1

Discounted Cash Flow Cash Flow 1rn all cash flows valu... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Analysis for Financial Management

Analysis for Financial Management

Authors: Robert Higgins

11th edition

77861787, 978-0077861780

More Books

Students also viewed these Finance questions

Question

★★★★★
The table below shows the projected free cash flows of an acquisition target. The potential acquirer wants to estimate its maximum acquisition price at an 8 percent discount rate and a terminal value...

Answered: 1 week ago

Question

★★★★★
A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 750,000 for Year 3. The projected terminal value at the end of Year 3 is $8,000,000. The firm's Weighted Average...

Answered: 1 week ago

Question

★★★★★
A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 750,000 for Year 3. The projected terminal value at the end of Year 3 is $8,000,000. The firm's Weighted Average...

Answered: 1 week ago

Question

★★★★★
In seawater, the pressure p is related to the depth d according to 33p - 18d = 495 where d is in feet and p is in pounds per square inch. (a) Solve this equation for p in terms of d. (b) The Titanic...

Answered: 1 week ago

Question

★★★★★
What is the difference between a cooperative and a noncooperative game? Give an example of each.

Answered: 1 week ago

Question

★★★★★
When data is transmitted across a noisy channel, information can be lost during the transmission. For example, a message that is sent through a noisy channel as WHO PARKED ON HARRY POTTERS SPOT?...

Answered: 1 week ago

Question

★★★★★
2. Why should educators concern themselves with Abraham Maslows hierarchy of needs? A. The stages in students development might determine their ability to be successful in certain subjects. B. Social...

Answered: 1 week ago

Question

★★★★★
The museum currently has a $30 million endowment, but it also has substantial operating costs and continues to add to its eclectic collection that encompasses paintings, photographs, drawings, and...

Answered: 1 week ago

Question

★★★★★
1.MFRS 108 refers to Accounting Policies,Changes in Accounting Estimates and Errors. (a)Identify which each of the following situations is a change of accounting policy under MFRS108 Accounting...

Answered: 1 week ago

Question

★★★★★
A feedback control system has the structure shown in Figure P2.35. Determine the closed-loop transfer function Y(s)/R(s) (a) By block diagram manipulation and (b) By using a signal-flow graph and...

Answered: 1 week ago

Question

★★★★★
Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:...

Answered: 1 week ago

Question

★★★★★
As a supervisor , write the solution for the employee scenario below Withdrawing from Work: "Chloe is an excellent worker. When she is on, she's on. But when she's not, she can be irritable, erratic,...

Answered: 1 week ago

Question

★★★★★
Downtown Kingston Transport Centre/ Project management Instructions: Read the case study below, access the links provided and answer all questions. The downtown Kingston and Saint Andrew Centre were...

Answered: 1 week ago

Question

★★★★★
The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin production of a new computer product. The company's president must determine whether to make the...

Answered: 1 week ago

Question

★★★★★
The retail positioning matrix is an analytical tool thatA ) positions retail outlets in terms of the breadth of product line and value addedB ) identifies the best location for building or leasing a...

Answered: 1 week ago

Question

★★★★★
Since understanding forces in our environment that either help or hinder the acquisition of human capital, answer the following: What are the internal and external factors that influence an...

Answered: 1 week ago

Question

★★★★★
Georges Personal Monthly Budget Budget Budget Income $3,850 Interest 90 TOTAL INCOME 3,940 Taxes 749 Rent 860 Vehicle Insurance 210 Food and Eating out 295 Car Payment 400 Student Loans 304 Sports...

Answered: 1 week ago

Question

★★★★★
APC16550D UART has a clock running at18.432 MHz and its baud rate is set to 2000.Determine the HEX contents of its DLM and DLL registers. Please can you explain step by step and in detail how you get...

Answered: 1 week ago

Question

★★★★★
Reconsider General Designs diamond film project from Table 8.6(b).Suppose that General Design now believes it also has an option to grow the project if things go well. Initial success in diamond film...

Answered: 1 week ago

Question

★★★★★
The spreadsheet available for download from McGraw-Hills Connect or your course instructor (see the Preface for more information) presents information concerning Harley-Davidson and five of its...

Answered: 1 week ago

Question

★★★★★
Neptune Biometrics, despite its promising technology, is having difficulty generating profits. Having raised $85 million in an initial public offering of its stock early in the year, the company is...

Answered: 1 week ago

Question

★★★★★
Assume that the time required to receive a confirmation that an electronic transfer has occurred is uniformly distributed between 30 and 90 seconds. a. What is the probability that a randomly...

Answered: 1 week ago

Question

★★★★★
The St. Maries plywood plant is part of the Potlatch Corporations Northwest Division. The plywood superintendent organized a study of the tree diameters that are being shipped to the mill. After...

Answered: 1 week ago

Question

★★★★★
If the number of hours between servicing required for a particular snowmobile engine is exponentially distributed with an average of 118 hours, determine the probability that a randomly selected...

Answered: 1 week ago

Previous Question Next Question