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Estimating the horizon value

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  1. Analysts often value companies by forecasting a series of cash flows and then estimating the horizon value. Suppose a firm forecasts cash flows (in $millions) in year 1 through 4 as $120, $130, $135, and $137, respectively. If the project grows thereafter at 3% annually and the discount rate is 10%, what is the firm's horizon value at t=4?
  2. If the answer to the previous question were V4= $1000, what is the firm's value (in $millions)?

Reference no: EM132379830

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