Reference no: EM132531294
Place a value on Ritchie Metals, whose headquarters and major sales area are located in the local area. The following information is relevant:
A) Use a 4-year time horizon to forecast free cash flow.
B) Free cash flow in 2010, at the end of the fiscal year, was $964,215 (at fiscal year-end 2004 free cash flow was $658,572.)
C) The compound growth rate of free cash flow is expected to continue up to the horizon period (the terminal year); after which a perpetual growth rate of 2% is likely.
D) Selected capital market data as of 2010 are:
· yield on 10-year Treasury securities is 3.5%.
· Betas for 6 similar companies average 1.286x;
· historical return (10 years) on a broad market average of common stock is 10%.
(Please make certain you show clearly the discount rate, the terminal value, and the total value for the firm.)
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: Place a value on Ritchie Metals, whose headquarters and major sales area are located in the local area. The following information is relevant:
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