Widget Corp. is expected to generate a free cash flow (FCF) of $1,235.00 million this year (FCF, = $1,235.00 million), and the FCF is expected to growat a rate of 20.20% over the following two years (FCF, and FCF). After the third year, however, the FCF is expected to grow at a constant rate of2.46% per year, which will last forever (FCF). Assume the firm has no nonoperating assets. If Widget Corp.'s weighted average cost of capital (WACC)is 7.38%, what is the current total firm value of Widget Corp.? (Note: Round all intermediate calculations to two decimal places.)O. $41,037.63 millionO $33,890.56 millionO $3,878.69 millionO $40,668.67 million

To calculate the current total firm value of Widget Corp., we need to use the discounted cash flow…

Answered: Widget Corp. is expected to generate a…

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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