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    Valuation

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    A firm generated free cash flow of $1 million last year and expects it to grow at a constant rate of 8 percent indefinitely. The company's weighted average cost of capital is 10 percent.

    a. Calculate the company's free cash flow for next year.

    b. Calculate the value of the company's operations.

    c. How much would the value of operations change if expected growth is 5 percent?

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    Solution Preview

    A firm generated free cash flow of $1 million last year and expects it to grow at a constant rate of 8 percent indefinitely. The company's weighted average cost of ...

    Solution Summary

    This solution is comprised of a detailed explanation to calculate the company's free cash flow for next year.

    $2.19

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