Constant FCF Growth Valuation Brook Corporation's free cash flow for the current year (FCF0) was $3.25 million. Its investors require a 15% rate of return on Brooks Corporation stock (WACC = 15%). What is the estimated value of the value of operations if investors expect FCF to grow at a constant annual rate of (1) - 3%, (2) 0%, (3) 5%, or (4) 10%? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to two decimal places. 1. $ million 2. $ million 3. $ million 4. $ million

Constant FCF Growth Valuation Brook Corporation's free cash flow for the current year (FCF0) was $3.25 million. Its investors require a 15% rate of return on Brooks Corporation stock (WACC = 15%). What is the estimated value of the value of operations if investors expect FCF to grow at a constant annual rate of (1) - 3%, (2) 0%, (3) 5%, or (4) 10%? Do not round intermediate calculations. Enter your answers in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answers to two decimal places. 1. $ million 2. $ million 3. $ million 4. $ million

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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Free Cash Flow Valuation Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFS) during the next 3 years, after which FCF is expected to grow at a constant 8% rate. Dozier's weighted average cost of capital is WACC = 14%. Free cash flow (millions of dollars) 1 -$20 Year 2 $30 per share 3 $40 a. What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. $ million b. What is the current value of operations for Dozier? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $10,550,000 should be entered as 10.55. Round your answer to two decimal places. million c. Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the…