Purchase Solution

Forecast of growth rate in free cash flow

Not what you're looking for?

Ask Custom Question

At the end of 2006, you forecast that a firm's free cash flow for 2007 will be $430 million. The firm has 5,000 million shares outstanding, trading at $4.30 each and no net debt. What is the forecast of the growth rate in free cash flows after 2007 that is implicit in the market price? Use a required return of 10%.

Purchase this Solution
Solution Summary

This explain the forecast of growth rate in free cash flow

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Enterprise value

    Enterprise value = Next year's free cash flow / (required return - growth rate of free cash flow) = $430 million / (10%-5%) = $8,600 million Answer: Enterprise value = $8,600 million This solution helps compute enterprise value by discounting a firm's

  • Corporate Valuation, Value-Based Management

    Calculate free cash flow for each projected year. Also calculate the growth rates of free cash flow each year to ensure that there is constant growth (that is, the same as the constant growth rate in sales) by the end of the forecast period. c.

  • Create a timeline in Excel for five years.

    To determine the stock value based on the discounted free cash flow method: a. Forecast the free cash flows (for seven years) using the historic data from the financial statements downloaded From Yahoo!

  • Time Value of Money in bond market value; zero growth

    The weakness for this model is that we must forecast the individual components of free cash flow which may not be accurate.

  • Zhdanov Inc. Cash Flow Forecast: What is WACC and Firm's Value?

    Cash Flow Forecast: What is WACC and Firm's Value? 5. Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million.

  • future cash flows, forecasts and market structure

    Since the perpetuity growth rate is higher than the growth rate of US GDP, the company's cash flow will outpace these large values. 10.

  • Operating income and residual operating income

    Value of Operations= Free cash flow *(1+growth rate)/ (Required return-growth rate) =8703.73 *(1+8.8%)/(12.3%-8.8%) =$270561.7 mn Note: I have taken Operating Income as free cash flow from operations Value of company's equity= Value of operations

  • Free cash flow

    to compute the free cash flow

  • Determining the Free Cash Flow

    The solution determines the free cash flow in the given problem.

View More Related Solutions