Rentech Ltd company a biotech company, is expected to grow rapidly in the next three years and then have a level growth rate for the foreseeable future. The company expects free cash flows of $342.5 million, $512.3 million, and $750 million over the next three years, and thereafter its cash flows will grow at a steady rate of 8 per cent per annum. The company has no non-operating assets (NOA). If the appropriate WACC is 11.25 per cent, what is the enterprise value of this business? Round to the nearest million. a.$19,367 million b.$18,101 million c.$26,190 million d.$24,923 million
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Rentech Ltd company a biotech company, is expected to grow rapidly in the next three years and then have a level growth rate for the foreseeable future. The company expects
a.$19,367 million b.$18,101 million c.$26,190 million d.$24,923 million
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