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What is the firm value of operations

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Reference no: EM132284810

Q1. Vasudevan, Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 17% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions?

Year  Free Cash Flow 

1  $ (22.00)

2  $ 42.00

3  $ 45.00

Q2. Zhdanov, Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$15 million (negative), but its FCF at t = 2 will be $30 million. After Year 2, FCF is expected to grow at a constant rate of 3% forever. If the weighted average cost of capital is 19%, what is the firm's value of operations, in millions?

Q3. Suppose Yon Sun Corporation's free cash flow during the just-ended   (t = 0) year was $150 million, and FCF is expected to grow at a constant rate of 4% in the future. If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions?

Reference no: EM132284810

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