Calculate terminal or horizon value of operations

Reference no: EM1344620

Sony Corporation has never paid a dividend. The free cash flow (FCF) is projected to be $40,000 & $50,000 for the next two years, and after the second year it is expected to grow at a constant rate of 6 percent. The WACC is 11 percent.

What is the terminal or horizon value of operations in millions? (Hint: First find the value of all FCF's beyond year 2 that are discounted back to year 2.)

a. $2.0
b. $1.06
c. $1
d. $1.095
e. None of the above

What is the value of Sony Corporation operations?
a. 1,045,000
b. 932,000
c. 936,936
d. 1,090,000
e. None of the above

Reference no: EM1344620

Questions Cloud

How long does it take to double your money : Explain how much will your collection be worth when you retire in 2058, assuming they appreciate at an annual rate of 6.1%

How long does it take for the last car to come : Do you agree with IBM's employment response to competition from software development contractors in India, like Wipro, that are expanding into IT consulting services? Why or why not.

Creating use case to describe typical sales process : Create use case to describe a typical sales process. Then make a sequence diagram for use case.

Explain how many days will he choose to stay in the hospital : If David's only illness this year results in an appendectomy, explain how many days will he choose to stay in the hospital.

Calculate terminal or horizon value of operations : Sony Company has never paid a dividend. The free cash flow is projected to be $40,000 & $50,000 for the next two years, & after 2nd year it is expected to grow at a constant rate of 6%.

Illustrate what monthly profit would she realize : Illustrate what monthly profit would she realize with that level of business during the next 3 years.

Characteristics of relational database management system : Describe the characteristics of a Relational Database Management System (RDBMS).

Avoiding the risk of sub optimization : ROI used to estimate the performance of an investment center manager can sometimes lead to sub optimization.

Determining valuing preferred stock : Best Rate Bank just issued some new preferred stock. The issue will pay a $10 annual dividend in perpetuity, beginning 10 years from now. If the market needs a 7% return on this investment

User Account

All Pages