The following are the projected cash flows to the firm over the next five years: Year Cash Flows to the Firm (Million) 1 $120 2 $145 3 $176 4 $199 5 $245 The firm has a cost of capital (WACC )of 12% and the cash flows are expected to grow at the rate of 4% in perpetuity? a) What is the value of the firm today? b) At what growth rate will the firm have a value of $3000 Million?
The following are the projected cash flows to the firm over the next five years: Year Cash Flows to the Firm (Million) 1 $120 2 $145 3 $176 4 $199 5 $245 The firm has a cost of capital (WACC )of 12% and the cash flows are expected to grow at the rate of 4% in perpetuity? a) What is the value of the firm today? b) At what growth rate will the firm have a value of $3000 Million?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter21: Dynamic Capital Structures And Corporate Valuation
Section: Chapter Questions
Problem 9P
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The following are the projected cash flows to the firm over the next five years:
Year | Cash Flows to the Firm (Million) |
---|---|
1 | $120 |
2 | $145 |
3 | $176 |
4 | $199 |
5 | $245 |
The firm has a cost of capital (WACC )of 12% and the cash flows are expected to grow at the rate of 4% in perpetuity?
a) What is the value of the firm today?
b) At what growth rate will the firm have a value of $3000 Million?
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