What is the firm value of operations

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Q1. Suppose Mature No Dividends Corporation's free cash flow during the just-ended (t = 0) year was $175 million, and FCF is expected to grow at a constant rate of 6% in the future. If the weighted average cost of capital is 17%, what is the firm's value of operations, in millions?

Q2. Diversified Industries, Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$18 million (negative), but its FCF at t = 2 will be $35 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?

Reference no: EM132285058

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