Determining the terminal growth rate

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Reference no: EM133122577

Betzy Inc. is a relatively new company. The company's prior year's (starting) free cash flow was found to be $185,000. The company currently has $35,000 in debt and 250,000 shares outstanding. Given that it is a relatively new company, you believe that Betzy Inc. will have strong growth over the next 5 years. After 5 years, you assume that the company's growth will stabilize to a normal rate and continue that rate of growth forever. For now, assume a growth rate of 12% for the first 5 years FCF and a terminal growth rate of 3% (rate after year 5).

Find fcf for year 1-5

Find terminal cash flow

WACC =10.47%

Note: assume annual end-of-year data

Reference no: EM133122577

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