The financial manager of the company SFT Inc. made the following forecasts concerning the free cash flow for years XX + 1 to XX + 4: Years Free cash flow XX+1 300 000 XX+2 375 000 XX+3 400 000 XX+4 380 000 According to the finance manager's forecast, the company's free cash flow is expected to increase at an annual rate of 5% from year XX + 5 for the foreseeable future. Knowing that the weighted average cost of capital after tax for this company is 15%, estimate: 1. The residual value of the company in year XX + 4 2. The overall value of the company

The financial manager of the company SFT Inc. made the following forecasts concerning the free cash flow for years XX + 1 to XX + 4: Years Free cash flow XX+1 300 000 XX+2 375 000 XX+3 400 000 XX+4 380 000 According to the finance manager's forecast, the company's free cash flow is expected to increase at an annual rate of 5% from year XX + 5 for the foreseeable future. Knowing that the weighted average cost of capital after tax for this company is 15%, estimate: 1. The residual value of the company in year XX + 4 2. The overall value of the company

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 25SP: Start with the partial model in the file Ch07 P25 Build a Model.xlsx on the textbook’s Web site....

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