Should the same cap rate be used for the forecast period

Assignment Help Financial Management

Reference no: EM132034839

Typically, cash flows are forecast over a 5-10 year period and a present value is determined picking the appropriate capitalization rate.

Then the value of the firm at the end of the forecast period is added to the value of the cash flows during the forecast period.

Should the same cap rate be used for the forecast period and post-forecast period?

Or should the post-forecast value use a lower cap rate since the firm would be a well-established company by then?

Reference no: EM132034839

Questions Cloud

What is the inventory level for this firm : Walmart, Inc has sales of $500 Billion dollars, a net profit of $90 Billion, What is the inventory level for this firm given this information?

What is the total cost of the purchase : What is the total cost of the purchase? What are the proceeds on the sale? What is the gain (or loss) on the transaction. Please help me with this problem.

What is one share of this stock worth today : The required return on this stock is 14 percent and the last dividend paid was $2.80 a share. What is one share of this stock worth today?

What are the dividends due the preferred shareholders : What are the dividends due the preferred shareholders? What is the dividend per share of common stock?

Should the same cap rate be used for the forecast period : Typically, cash flows are forecast over a 5-10 year period and a present value is determined picking the appropriate capitalization rate.

Proportional to the square of the velocity : Assume that the air resistance is proportional to the square of the velocity, then the time t in seconds required for an object to reach a velocity

How teaching methodologies impact approach to education : How do teaching principles, varied learning styles (for both nurses and patients), and teaching methodologies impact the approach to education?

Compute the net proceeds to tyson iron works : Tyson Iron Works is about to go public. It currently has aftertax earnings of $5,100,000, and 3,900,000 shares are owned by the present stockholders.

What would be the value of the fund after the last deposit : What would be the value of the fund after the last deposit if the interest rate is 10% compounded semi-annually

User Account

All Pages