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What is the operation value of xyz corporation

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Reference no: EM133011675

XYZ Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. However, FCF is expected to be $30 million in year 5, i.e., FCF at t= 5 equals $30 million, and FCF growth rate is expected to be constant at 5% beyond that point. The initial investment is $280 Millions.

Year          FCF Millons
1                       60
2                      30
3                      40
4                       40
5 and hereafter    30

Problem 1) What is the weighted average capital cost of 11%, what is the horizon value (in millions) at t=5?

Problem 2) What is the operation value of XYZ Corporation?

Reference no: EM133011675

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