Calculate the discount the terminal value

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Consider the following information regarding Cruz Electronics: 2018 2019 2020 EBIT $2000 $2500 $2800 Capital Expenditures $500 $500 $500 Changes in Working capital $40 $(10) $(20) Depreciation $50 $60 $100 Assume a 21% tax rate and that after 2020 the EBIT growth rate will be 2% annually; depreciation will equal capital expenditures, and that net working capital will not change. Also assume a discount rate of 12%. What is the NPV of Cruz Electronics total free cash flow for the period 2018 through 2020? Select one: a. $3,925 b. $3,182 c. $3,137 d. $4,731 e. $3,509 Question 50 Not yet answered Marked out of 5.00 Not flaggedFlag question Question text Continuing with Cruz Electronics. Assume that the NPV of the 2018 Free Cash Flow is $2,500 (its not and don't make any assumptions regarding changing the cash flow data in the first Cruz question). Using the same information as provided in the first Cruz question, calculate the NPV of Cruz Electronics considering Cruz's terminal value. HINT: Calculate then discount the terminal value and add the number to $2,500.

Reference no: EM131983320

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