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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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
Transcribed Image Text: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
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