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, compute the value of KMS.

, compute the value of KMS.

Essentials Of Investments
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
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The table below gives the estimated free cash flow under the 0.26% growth scenario. Using these estimates and assuming a cost of capital of 9.8%, compute the value of KMS. Year Free Cash Flow (000) Free Cash Flow of Firm Continuation Value 2013 $7,666 2014 $5,796 2015 The value of KMS is $ thousand. (Round to the nearest integer.) -$15,664 2016 $5,366 2017 $6,443 2018 D $7,608 $222,332 The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.
Transcribed Image Text:The table below gives the estimated free cash flow under the 0.26% growth scenario. Using these estimates and assuming a cost of capital of 9.8%, compute the value of KMS. Year Free Cash Flow (000) Free Cash Flow of Firm Continuation Value 2013 $7,666 2014 $5,796 2015 The value of KMS is $ thousand. (Round to the nearest integer.) -$15,664 2016 $5,366 2017 $6,443 2018 D $7,608 $222,332 The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.
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