.2 points Question 25 Simonyan Inc. forecasts a free cash flow of $40 million in
ID: 2681466 • Letter: #
Question
.2 pointsQuestion 25
Simonyan Inc. forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter. If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?
Answer $840
$882
$926
$972
$1,021
.2 points
Question 26
Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
Answer $1,456
$1,529
$1,606
$1,686
$1,770
.2 points
Question 27
Based on the corporate valuation model, the value of a company
Explanation / Answer
$926 $1,606 $27.67 $1,158 $451 $25.56
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