Calculate mci communications value

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Question: Calculate MCI Communications Value / FCFF

MCI Communications had earnings before interest and taxes of $3,356 million in 1994 (Its net income after taxes was $855 million).

It had capital expenditures of $2,500 million in 1994 and depreciation of $1,100 million; Working capital increased by $250 million.

It expects free cash flows to the firm to grow 18% a year for the next five years and 3% a year after that.

The cost of capital is 11% for the next five years and 9% after that.

The company faces a tax rate of 40%.

Reference no: EM131926043

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