Fundamentals of Corporate Finance 3e Test Bank 72. ProtoSeis Corp. is expected t
ID: 2725950 • Letter: F
Question
Fundamentals of Corporate Finance 3e Test Bank 72. ProtoSeis Corp. is expected to grow rapidly in the next four years and then have a zero growth rate for the foreseeable future. The firm expects free cash flows of $42.5 million, $64.3 million, $77.1 million and $92 million over the next four years, and thereafter its cash flows will stay constant. The company has cash to the tune of $23.4 million. If the appropriate WACC is 10 percent, what is the enterprise value of this business? (Do not round intermediate computations. Round final answer to the nearest million.)Explanation / Answer
72.
Firm value = 42.5/1.10^1+64.3/1.10^2+77.1/1.10^3+92/1.10^4+(92/0.10)/1.10^4=840.91 million
Firm value is also the enterprise value
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