Assume the following free cash flows for Elle Inc. for Year 6 and forecasted FCFF for Year 7 onward (in millions): Current Forecast Horizon Terminal Year ($millions) Year 7 Year 8 Year 9 Year 10 Year 11 Free cash flows to the firm (FCFF) $4,973 $5,222 $5,482 $5,757 $6,045 $6,166 The DCF value of the firm using the FCFF information above, a discount rate of 6%, and an expected terminal growth rate of 2%, is: $150,020 million $141,529 million $134,617 million $100,828 million None of these are correct.
Assume the following free cash flows for Elle Inc. for Year 6 and forecasted FCFF for Year 7 onward (in millions): Current Forecast Horizon Terminal Year ($millions) Year 7 Year 8 Year 9 Year 10 Year 11 Free cash flows to the firm (FCFF) $4,973 $5,222 $5,482 $5,757 $6,045 $6,166 The DCF value of the firm using the FCFF information above, a discount rate of 6%, and an expected terminal growth rate of 2%, is: $150,020 million $141,529 million $134,617 million $100,828 million None of these are correct.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Assume the following
|
|
Current |
Forecast Horizon |
Terminal Year |
|||
|
($millions) |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
Year 11 |
|
|
Free cash flows to the firm (FCFF) |
$4,973 |
$5,222 |
$5,482 |
$5,757 |
$6,045 |
$6,166 |
The DCF value of the firm using the FCFF information above, a discount rate of 6%, and an expected terminal growth rate of 2%, is:
|
$150,020 million |
||
|
$141,529 million |
||
|
$134,617 million |
||
|
$100,828 million |
||
|
None of these are correct. |
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