Firm has weighted average cost of capital

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Reference no: EM132041938

Skeets Mfg Inc forecasts the following financial information for the next 3 years (in millions):

Year 1 Year 2 Year 3

Revenues $25,200 $27,540 $32,300

Operating Expenses $13,650 $13,848 $14,200

Depreciation $6,573 $5,580 $6,750

EBIT $4,977 $8,112 $11,350

Interest Expenses $1,170 $1,572 $1,325

Taxes $1,332 $2,289 $3,509

Net Income $2,475 $4,251 $6,516

Increase in NWC $165 $420 $735

The firm estimates capital expenditures of $1,200 million in year1, $750 million in year 2 and $1,550 million in year 3. Determine the value of the firm today if we assume that the free cash flows will grow at 3% per year indefinitely after year 3 and the firm has a weighted average cost of capital of 14%?

Reference no: EM132041938

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