Imagine a company that has never and will never pay any dividend to its common shareholders. The weighted average cost o
Posted: Thu May 19, 2022 5:31 am
Imagine a company that has never and will never pay any dividend
to its common shareholders. The weighted average cost of capital is
7.4%. The number of outstanding stocks is 1 M and the market value
of the Debt is $30 M. Free cash flows are expected to grow at a 10%
rate for 3 years and 5% thereafter. The Free cash Flows for the
next 4 years are then FCF1=$3 M; FCF2=$3.3 M; FCF3= $3. 63 M; FCF4=
$3.81 M. What is the Value of the firm (VF)?
to its common shareholders. The weighted average cost of capital is
7.4%. The number of outstanding stocks is 1 M and the market value
of the Debt is $30 M. Free cash flows are expected to grow at a 10%
rate for 3 years and 5% thereafter. The Free cash Flows for the
next 4 years are then FCF1=$3 M; FCF2=$3.3 M; FCF3= $3. 63 M; FCF4=
$3.81 M. What is the Value of the firm (VF)?