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What do you estimate is firm current market capitalisation

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Question: An analyst forecasts that a firm's nominal Equity Free Cash Flow will be $1 million next year and is expected to grow at the country's nominal GDP growth rate. The nominal required return on levered equity is 10% pa. The firm's assets and equity can be valued as a perpetuity. The analyst looks up GDP growth and finds that it's 3% pa in real terms or 'constant prices'. Inflation is expected to be 2% pa. All rates are effective annual rates. What do you estimate is the firm's current market capitalisation of equity?

Reference no: EM132753620

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