In the basic EOQ model, if annual demand is 50, carrying/holding cost is $2, and ordering cost is $15, This will result in a tot
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Answer:
Firm value in millions 1,605 (one thousand six houndred five milllions)
Explanation:
To evaluate a firm based on the free cash flow we do a procedure similar to gordon dividend grow model
We are going to replace dividend for the free cash flow
and the return for the WACC
notice we are given with the current FCF and for the gordon model we require dividend for the next year. (time=1)
here we need the same
FCF x (1+g) = 120 x (1 + 0.07) = 128.4
WACC .15
grow 0.07
Firm value in millions 1,605 (one thousand six houndred five milllions)