Purchase Solution

Free Cash Flow

Not what you're looking for?

Ask Custom Question

Suppose a company's most recent free cash flow (i.e., yesterday's free cash flow) was $100 million and is expected to grow at a constant rate of 5 percent. If the company's weighted average cost of capital is 15 percent, what is the current value of operations?

a. $ 913 million
b. $1,000 million
c. $1,050 million
d. $1,500 million
e. $2,000 million

14. A company forecasts free cash flow of $50 million in five years. It expects the free cash flow to grow at a constant rate of 6 percent thereafter. If the weighted average cost of capital is 12 percent, what is the horizon value, to the nearest million?

a. $53 million
b. $501 million
c. $600 million
d. $833 million
e. $883 million

Purchase this Solution

Solution Summary

This explains the computation of Free Cash Flow with an example

Solution Preview

Response is attachedSuppose a company's most recent free cash flow (i.e., yesterday's free cash flow) was $100 million and is expected to grow at a constant rate of 5 percent. If ...

Purchase this Solution


Free BrainMass Quizzes
Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Motivation

This tests some key elements of major motivation theories.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.