Compute the value of the perpetuity of free cash flow

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In order to compute the market value of a company, we need to include the perpetuity, also called the horizon value. Suppose the forecast amount of invested capital at the end of the forecast period is $500,000. Beyond the horizon, we assume ROIC will be 15% and the growth rate will be 4%. Given a WACC of 12%, what is the horizon value of FCF? Do not discount this back to present value -- just compute the value of the perpetuity of free cash flow beyond the horizon value. Ignore mid-year discounting.

Reference no: EM131878405

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