Question

YR 1 $50,000, YR 2 $90,000, YR 3 $70,000, and YR 4 $100,000. There is a...

YR 1 $50,000, YR 2 $90,000, YR 3 $70,000, and YR 4 $100,000. There is a terminal value of $800,000. If the weighted average cost of capital is 12% then what is the value of the firm using the absolute valuation method

Homework Answers

Answer #1
Year Particulars Cash Flow PV Factor PV Of Cash Flow
a b c d=1/1.12^a e=c*d
1 Cash Fllow $       50,000 0.89286 $           44,642.86
1 Cash Fllow $       90,000 0.89286 $           80,357.14
3 Cash Fllow $       70,000 0.71178 $           49,824.62
4 Cash Fllow $   1,00,000 0.63552 $           63,551.81
4 Terminal Value $   8,00,000 0.63552 $       5,08,414.46
Value of firm $       7,46,790.89
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