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kkurt [141]
3 years ago
10

An analyst seeks to determine the value of Bulldog Industries. After careful research, the analyst believes that free cash flows

for the firm will be $80 million in the upcoming year (year 1) and will grow at 10% annually for each of the two following years (years 2 and 3). The free cash flows will grow at a rate of 5% after year 3. What is the Terminal Value (in millions of $) of Bulldog at the end of year 3 at a WACC of 10%?
Business
1 answer:
Reil [10]3 years ago
3 0

Answer:

$2,033

Explanation:

The computation of the terminal value at the end of the year 2 is shown below:

= {Free cash flow of the firm × (1 + growth rate) × (1 + growth rate) + (1+ growth rate)} ÷ (WACC - growth rate)

= {($80 million × (1 + 0.10) × (1 + 0.10) × (1 + 0.05)} ÷ (10% - 5)

= $101.64 ÷ 0.05

= $2,033

We simply applied the above formula so that the Terminal value could arrive

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With regard to a prior perfected security interest in goods for which a financing statement has been filed, which parties is mos
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3 years ago
The option of sticking with the current business lineup makes sense when
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Gary’s Company produces high quality shirts. Shirts must be well made because of frequent washings. Currently, Gary sells 10,000
grin007 [14]

Answer:

Unless the capacity is expanded or some of the production gets outsource, the offer is not convenient.

Explanation:

Giving the following information:

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Unless the capacity is expanded or some of the production gets outsource, the offer is not convenient.

6 0
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GenaCL600 [577]

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