Consider the following information Year Profit Ending book value of assets Ending book value of debt 1 $100 $1 030 $720 2 $120 $1 060 $740 3 $60 $1 000 $800 At the end of year t, the company’s book value of assets and debt are $1 000 and $700, respectively. The analyst expects that after year t+3 profit will be $0 and the book values of assets and debts will not change from the prior year. The cost of equity (WACC) is 10 per cent. Calculate the present value of free cash flows for the end of each year.
Consider the following information
Year Profit Ending book value of assets Ending book value of debt
1 $100 $1 030 $720
2 $120 $1 060 $740
3 $60 $1 000 $800
At the end of year t, the company’s book value of assets and debt are $1 000 and $700, respectively. The analyst expects that after year t+3 profit will be $0 and the book values of assets and debts will not change from the prior year. The
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