Question

ABC Corp. generated $500,000 in Free Cash Flow in the year that ends today and paid...

ABC Corp. generated $500,000 in Free Cash Flow in the year that ends today and paid the entire amount out to it's owners as a dividend. Assuming their Free Cash Flow grows by 5% per year for the next four year and then continues to grow at a 2.5% rate per year forever, what is the value of ABC Corp. today assuming they have need to Earn 9% returns for their owners?

Group of answer choices:

a)$8,447,000

b)$8,613,000

c)$9,113,000

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

CASH FLOW WHICH IS RECEIVED HAS NO FUTURE VALUE, SO DOES NOT CONSIDER IN npv calculation.

please ask if any query.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Target Corp generated $10 billion of Operating Cash Flow last year while spending $6 billion on...
Target Corp generated $10 billion of Operating Cash Flow last year while spending $6 billion on investments in Fixed Assets (capital expenditures) and an additional $0.5 billion on increases in Working Capital. You expect Free Cash Flow to grow by 15% for the next two years and then grow at 4% annually, forever. You require a 15% expected annual return on your investment in Target. Estimate the value of Target using a discounted cash flow analysis, assuming that Target has...
Praxis Corp. is expected to generate a free cash flow (FCF) of $7,890.00 million this year...
Praxis Corp. is expected to generate a free cash flow (FCF) of $7,890.00 million this year ( FCF1 = $7,890.00 million), and the FCF is expected to grow at a rate of 20.20% over the following two years ( FCF2 and FCF3 ). After the third year, however, the FCF is expected to grow at a constant rate of 2.46% per year, which will last forever ( FCF4 ). If Praxis Corp.’s weighted average cost of capital (WACC) is 7.38%,...
Lycan, Inc. anticipates that it will earn a firm free cash flow of $2,100,000 a year...
Lycan, Inc. anticipates that it will earn a firm free cash flow of $2,100,000 a year in 2019. The amount of free cash flows Lycan can generate since then will grow at 5% per year until 2022. The owner of the firm will retire in 2022 and sell the company. The comparable BITDA multiple for this type of company is 15x. Assume Lycan's EBITDA for 2022 will be $2,000,000. What is the current value of this firm if it's WACC...
During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and...
During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-640.00 million). At the end of the first year, Len Corp. had $200 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year? $337.50 million $562.50 million $-225.00 million...
You are valuing a company that generated free cash flow of $10 million last year, which...
You are valuing a company that generated free cash flow of $10 million last year, which is expected to grow at a stable 3.0% rate in perpetuity thereafter. The company has no debt and $8 million in cash. The market risk premium is 8.4%, the risk-free rate is 2% and the firm’s beta is 1.4. There are 50 million shares outstanding. How much is each share worth according to your valuation analysis?
You are valuing a company that generated free cash flow of $10 million last year, which...
You are valuing a company that generated free cash flow of $10 million last year, which is expected to grow at a stable 3.0% rate in perpetuity thereafter. The company has no debt and $8 million in cash. The market risk premium is 8.4%, the risk-free rate is 2% and the firm’s beta is 1.4. There are 50 million shares outstanding. How much is each share worth according to your valuation analysis?
Assume ABC Corp. will earn $550 this year, $500 one year from now, $600 two years...
Assume ABC Corp. will earn $550 this year, $500 one year from now, $600 two years from now, $800 three years from now, $800 four years from now, and $1,000 five years from now. Assuming the interest rate of 15.4% and that it will compound annually, what will be the total present value of ABC Corp.’s earnings? Group of answer choices $2,957.28 $2,897.94 $2,894.10 $2,906.53
a. Calculate the free cash flow generated by a firm which has earnings before interest and...
a. Calculate the free cash flow generated by a firm which has earnings before interest and taxes of £30m, has depreciated its fixed assets by £1m, has invested £10m in new fixed assets and £5m in working capital during 2019 when it paid corporate tax at 20%. Explain what you have assumed about the firm’s asset base. b.During 2019 the firm in (a) generated revenue of £60m, its cost of goods sold was £20m and its selling, general and administrative...
Question 7 You are valuing a company that generated free cash flow of $10 million last...
Question 7 You are valuing a company that generated free cash flow of $10 million last year, which is expected to grow at a stable 3.0% rate in perpetuity thereafter. The company has no debt and $8 million in cash. The market risk premium is 8.4%, the risk-free rate is 2% and the firm’s beta is 1.4. There are 50 million shares outstanding. How much is each share worth according to your valuation analysis? 1. $2.75 2. $2.02 3. $2.07...
Beishan Technologies' end-of-year free cash flow (FCF1) is expected to be $70 million, and free cash...
Beishan Technologies' end-of-year free cash flow (FCF1) is expected to be $70 million, and free cash flow is expected to grow at a constant growth rate of 5% a year in the future. The firm's WACC is 10%, and it has $600 million of long-term debt and preferred stock. If the firm has 34 million shares of common stock outstanding, what is the estimated intrinsic value per share of their common stock? Your answer should be between 14.20 and 68.54
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT