Mooradian Corporation’s free cash flow during the just-ended year (t = 0) was $250 million, and its FCF is expected to grow at a

Question

2 years ago

10

Mooradian Corporation’s free cash flow during the just-ended year (t = 0) was $250 million, and its FCF is expected to grow at a

constant rate of 5.0% in the future. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 12.5%, what is the firm’s total corporate value, in millions?

Business

1 answer:

LenaWriter [7] · Answer 1 · 2022-03-08T07:36:31+03:00

LenaWriter [7]2 years ago

7 0

Answer:

the firm’s total corporate value is 3.500.000.000

Explanation:

Consider the following formula to calculate the corporate value of the firm

Firm Total Corporate Value =Free cash flow (T1) / Ke - G

= 250.000.000 ( 1+0.05)/12.5%-5%

= 3.500.000.000