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You know that a firm's cash flows are growing rapidly over the next three years. After that three year period, the firm's free cash flow
You know that a firm's cash flows are growing rapidly over the next three years. After that three year period, the firm's free cash flow growth rate will slow to the long-term growth rate of the U.S. economy (2%). If the market capitalization rate is 10% and the firm's first three free cash flows to equity are listed below, calculate the intrinsic value of the firm's equity.
Year | FCFE per share |
1 | 2 |
2 | 3 |
3 | 5 |
A) $65.28
B) $44.28
C) $78.75
D) $55.95
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