Financial Management: Theory & Practice
16th Edition
ISBN: 9781337909730
Author: Brigham
Publisher: Cengage
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Chapter 7, Problem 25SP
Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site. Selected data for the Derby Corporation are shown here. Use the data to answer the following questions.
- a. Calculate the estimated horizon value (i.e., the value of operations at the end of the
forecast period immediately after the Year-4free cash flow ). Assume growth becomes constant after Year 3. - b. Calculate the
present value of the horizon value, the present value of the free cash flows, and the estimated Year-0 value of operations. - c. Calculate the estimated Year-0 price per share of common equity.
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Chapter 7 Solutions
Financial Management: Theory & Practice
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