1. Horizon Value of Free Cash Flows Current and projected free cash flows for Ra

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1.

Horizon Value of Free Cash Flows

Current and projected free cash flows for Radell Global Operations are shown below.

Growth is expected to be constant after 2017, and the weighted average cost of capital is 11.85%. What is the horizon (continuing) value at 2018 if growth from 2017 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.

$ million

Explanation / Answer

growth rate = 769.49/712.49 - 1 = 8.00%

Horizon value at 2018 = 769.49 * 1.08/(0.1185 - 0.08)

horizon vaue at 2018 = 21,586

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