ABC Company expects its free cash flows to vary considerably during the next few years. However, its FCF is expected to be $28 million in Year 5 (i.e., FCF at t=5), and the FCF growth rate is expected to be a constant 6.4% beyond that point. The company's WACC is 12.4%. What is the horizon value (in millions) in year 5 (i.e., t=5)? Do not discount the horizon value to Year 0. Round your answer to the nearest dollar. (Hint: Use the horizon value (HV) formula with a constant growth.) Group of answer choices $514 million $508 million $497 million $520 million $503 million
ABC Company expects its free cash flows to vary considerably during the next few years. However, its FCF is expected to be $28 million in Year 5 (i.e., FCF at t=5), and the FCF growth rate is expected to be a constant 6.4% beyond that point. The company's WACC is 12.4%. What is the horizon value (in millions) in year 5 (i.e., t=5)? Do not discount the horizon value to Year 0. Round your answer to the nearest dollar. (Hint: Use the horizon value (HV) formula with a constant growth.) Group of answer choices $514 million $508 million $497 million $520 million $503 million
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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ABC Company expects its free cash flows to vary considerably during the next few years. However, its FCF is expected to be $28 million in Year 5 (i.e., FCF at t=5), and the FCF growth rate is expected to be a constant 6.4% beyond that point. The company's WACC is 12.4%. What is the horizon value (in millions) in year 5 (i.e., t=5)? Do not discount the horizon value to Year 0. Round your answer to the nearest dollar. (Hint: Use the horizon value (HV) formula with a constant growth.)
Group of answer choices
$514 million
$508 million
$497 million
$520 million
$503 million
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