Free Cash Flow Valuation You Are Evaluating The Potential Purchase Of A Small Business With No Debt Or Preferred Stock T 1 (60.47 KiB) Viewed 38 times
Free Cash Flow Valuation You Are Evaluating The Potential Purchase Of A Small Business With No Debt Or Preferred Stock T 2 (28.29 KiB) Viewed 38 times
Free cash flow valuation You are evaluating the potential purchase of a small business with no debt or preferred stock that is curre opportunites, you must eam a(n) 20% rate of return on the proposed purchase. Because you are relatively uncertain about future cas cash flows. a. What is the firm's value if cash flows are expected to grow at an annual rate of 0% from now to infinity? b. What is the firm's value if cash flows are expected to grow at a constant annual rate of 7% from now to infinity? c. What is the firm's value if cash flows are expected to grow at an annual rate of 12% for the first 2 years, followed by a constant ann a. The firm's value, if cash flows are expected to grow at an annual rate of 0% from now to infinity, is $. (Round to the nearest cent b. The firm's value, if cash flows are expected to grow at a constant annual rate of 7% from now to infinity, is $ . (Round to the near c. The firm's value, if cash flows are expected to grow at an annual rate of 12% for the first 2 years, followed by a constant annual rate
Business with no debt or preferred stock that is currently generating $42,600 of free cash flow (FCF = $42,600). On the basis of a review of similar-risk investment cause you are relatively uncertain about future cash flows, you decide to estimate the firm's value using several possible assumptions about the growth rate of 0% from now to infinity? rate of 7% from now to infinity? 12% for the first 2 years, followed by a constant annual rate of 7% from year 3 to infinity? Im now to infinity, is (Round to the nearest cent.) 57% from now to infinity, is $ (Round to the nearest cont.) For the first 2 years, followed by a constant annual rate of 7% from year 3 to infinity, is $. (Round to the nearest cont.)
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