8. A software company which recently shifted its market focus from about 90% of export to a mix of 80% export and 20%domestic business strategy. One of the reasons for the shift in the business mix is because of better adoption oftechnology by domestic companies and the second being higher volatility in the currency.Following are the old and new financials. In billion INRSalesEBITNOPATDepreciationCAPEXWorking capitalOld8002401921040120New9002502001550162Compute the free cash flow under both situations. In both situations the company had a WACC of 10%. Beyond this year,the free cash flow is expected grow at 5% till infinity. Compute the original and revised value of the company. Accordingto you (based on the above numbers and your valuation) what would have been the reason for increase/decrease in thevalue because of the new business strategy.

Value of Company is computed by following formula:-Value of Company = whereFCF = free cash flows of…

Answered: 8. A software company which recently…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter1: Multinational Financial Management: An Overview

Section: Chapter Questions

Problem 18QA

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