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You have prepared the following pro forma income statement for a company you want to value (everything is in million dollars). The depreciation reflects a
You have prepared the following pro forma income statement for a company you want to value (everything is in million dollars). The depreciation reflects a capital expenditure of $100 million that occurred at t=0 and that will be depreciated straight line over 4 years starting in year 1. Assume that: - Sales are expected to remain $100 million forever, and the cost is expected to remain 25% of sales. - The level of net working capital is expected to be 30% of sales, forever. - The company is not expected to have any capital expenditures in the future. - The company is all equity and does not have excess cash. The unlevered cost of capital is 10%. That is the free cash flow in year 4 (in million dollars)
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