FI515 Financial Management Week 8: (TCO B) Zhdanov Inc. forecasts that its free cash flow
FI515 Financial Management Week 8
(TCO B) Zhdanov Inc. forecasts that its free cash flow in the coming year, that is, at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever.
If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions? (Points : 35)