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You decide to calculate the intrinsic value of FDR using FDR's free cash flow to the firm (FCFF). FDR's FCFF was $1.74 million last year.
You decide to calculate the intrinsic value of FDR using FDR's free cash flow to the firm (FCFF). FDR's FCFF was $1.74 million last year. You estimate that FCFF will grow at a rate of 6% for a period of 2 years. After this period, the FCFF will grow at a constant rate of 3% for perpetuity. The beta on FDR is 1.17, the required return on the market is 4.2% and the risk-free rate is 3.7%. The weighted average cost of capital (WACC) is 9.3% for FDR. Calculate the appropriate intrinsic value for FDR (Note, in this case you are valuing the whole company as we are not working with per share numbers). Your
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