Praxis Corp. is expected to generate a free cash flow (FCF) of $1,995.00 million this year (FCF = 1 $1,995.00 million), and the FCF is expected to grow at a rate of 20.20% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 2.46% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Praxis Corp.'s weighted average cost of capital (WACC) is 7.38%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) $66,291.80 million $65,695.79 million $6,265.58 million $54,746.49 million
Praxis Corp. is expected to generate a free cash flow (FCF) of $1,995.00 million this year (FCF = 1 $1,995.00 million), and the FCF is expected to grow at a rate of 20.20% over the following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to grow at a constant rate of 2.46% per year, which will last forever (FCF4). Assume the firm has no nonoperating assets. If Praxis Corp.'s weighted average cost of capital (WACC) is 7.38%, what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations to two decimal places.) $66,291.80 million $65,695.79 million $6,265.58 million $54,746.49 million
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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Transcribed Image Text:Praxis Corp. is expected to generate a free cash flow (FCF) of $1,995.00 million this year (FCF
=
1 $1,995.00 million), and the FCF is expected to grow at a rate of 20.20% over the
following two years (FCF2 and FCF3). After the third year, however, the FCF is expected to
grow at a constant rate of 2.46% per year, which will last forever (FCF4). Assume the firm has
no nonoperating assets. If Praxis Corp.'s weighted average cost of capital (WACC) is 7.38%,
what is the current total firm value of Praxis Corp.? (Note: Round all intermediate calculations
to two decimal places.)
$66,291.80 million
$65,695.79 million
$6,265.58 million
$54,746.49 million
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