Solution-How do calculate terminal value

How do calculate terminal value

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Reference no: EM132492197

Given: Gross Margin 40% Fixed Costs $ 2,000 Revenue Growth Rate for Years 1 - 5 10% FCF Steady Growth 3% Discount Rate 12% Year 1 Revenue $ 5,000 Tax Rate 35% Terminal Year 5

1 2 3 4 5

Revenues $ 5,000 $ 5,500 $ 6,050 $ 6,655 $ 7,321

Gross profits 2,000 2,200 2,420 2,662 2,928

Fixed Costs 2,000 2,000 2,000 2,000 2,000

Net Operating Income $ - $ 200 $ 420 $ 662 $ 928

Taxes $ - $ 70 $ 147 $ 232 $ 325

Free Cash Flow $ - $ 130 $ 273 $ 430 $ 603

NPV for years 1-5 $ - $ 104 $ 194 $ 273 $ 342

PV 0.000 0.797 0.712 0.636 0.567

Question 1: How do calculate: Terminal Value (as of Year 5)

Reference no: EM132492197

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How do calculate terminal value

Reference no: EM132492197

Reference no: EM132492197

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