Answer:
The answer is $259,116.04 million
Explanation:
The current total firm value of Allied Biscuit Co will be equal to the present value of future cash flow of the firm.
Present value of FCF1 = 8,140 million / 1.063 = $7,657.57 million;
Present value of FCF2 = (8,140 x 1.19) / 1.063^2 = $8,572.45 million;
Present value of FCF3 = (8,140 x 1.19^2) / 1.063^3 = $9,596.63 million.
Present value of the growing perpetuity at 2% of cash flow after year 3:
[ (8,140 x 1.19^2 x 1.021) / ( 6.3% - 2.1%) ] / 1.063^3 = $233,289.39 million.
So, the current total firm value:
7,657.57 + 8,572.45 + 9,596.63 + 233,289.39 = $259,116.04 million.
