Calculate the expected free cash flow

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Talcon Corporation has a 11% unlevered cost of equity. The company forecasts the free cash flows shown below. The cash flows are expected to grow at a constant rate of 4% rate after Year3.

Unlevered cost of equity- 11%

Growth Rate after Year 3- 4%

Free Cash flows Year 1 Year 2 Year 3

450 750 805

a. Calculate the expected free cash flow for Year 4. What might cause the free cash flow to be lower?

b. Calculate the horizon value of the unlevered operations.

c. Calculate the total value of unlevered operations at Year 0.

Please include the excel sheet so I can understand the equations as well please.

Reference no: EM132390825

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