Afterpay Ltd’s current year’s free cash flow is $20 million. It is projected to grow at 12% per year for the next five years. It is expected to grow at a more modest 3% beyond the fifth year. The firm estimates that its cost of capital is 9% during the next five years and then will drop to 7% beyond the fifth year as the business matures. Estimate the value of Afterpay Ltd.

Afterpay Ltd’s current year’s free cash flow is $20 million. It is projected to grow at 12% per year for the next five years. It is expected to grow at a more modest 3% beyond the fifth year. The firm estimates that its cost of capital is 9% during the next five years and then will drop to 7% beyond the fifth year as the business matures. Estimate the value of Afterpay Ltd.

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 11P: Brook Corporation’s free cash flow for the current year (FCF0) was $3.00 million. Its investors...

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