DeAn entire company being valued has free cash flows forecasted as shown and a terminal value of $1,000,000. If the cost of capital (i.e., the required rate ofreturn) is 10%, what is the value of the entire company?Year OYear 4Year 1$200,000Year 2$300,000Year 3$350,000Year 5Initial Investment$375,000$400,000Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234Type your answer...

The discounted cash flow valuation model is a metric that evaluates the worth of the project or…

An entire company being valued has free cash flows forecasted as shown and a terminal value of $1,000,000. If the cost of capital (i.e., the required rate of return) is 10%, what is the value of the entire company? Year O Year 4 Year 5 Year 1 $200,000 Year 2 $300,000 Year 3 $350,000 Initial Investment $375,000 $400,000 Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234 Type your answer...

An entire company being valued has free cash flows forecasted as shown and a terminal value of $1,000,000. If the cost of capital (i.e., the required rate of return) is 10%, what is the value of the entire company? Year O Year 4 Year 5 Year 1 $200,000 Year 2 $300,000 Year 3 $350,000 Initial Investment $375,000 $400,000 Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234 Type your answer...

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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For example, if you a simple average of 5 year of either income or cash flow of:year 1 100year2 100year 3 100year 4 100year 5 100total 500average 100cap rate 0.2value 500 Now you go to the balance sheet as of the valuation date and have a cash balance of $500 and the industry working capital benchmark is $200, is it fair to add $300 to the value of the business? That is really the question. In practice, particularly matrimonial valuations, some practitioners would opine, if the owner sells the business they would realize $500 in value plus $300 in excess working capital for a total value of $800. Remember the value included the $300 ($100 each year), possibly not distributed cash flow/earnings, is that really value?