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uppose Boyson Corporation's projected free cash flow for next year is FCF 1 = $150,000, and FCF is expected to grow at a constant rate of 6.5%. If the company's weighted average cost of capital is 11.5%, what is the value of its operations?

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ayokenny2001

Answer:

Firm's corporate value is $3,000,000

Explanation:

Future cash flow = $150,000

Expected growth rate 6.5%

Weighted average cost of capital = 11.5%

Therefore, Firm's total corporate value = Future cash flow / Cost of capital - Growth rate

= $150,000 / 11.5% - 6.5%

= $3,000,000

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