In year 1 your new business earns $25,000 in cash flow to shareholders. In year 2 your business yields $32,000 in cash flow to shareholders. The money comes in at the end of each year. The firm’s third year realizes cash flow 5% more than year 2. If the cost of capital of your business is 10%, and if the company reaches long-term growth by year 3 (at 5%), what is the present value of this business?
In year 1 your new business earns $25,000 in cash flow to shareholders. In year 2 your business yields $32,000 in cash flow to shareholders. The money comes in at the end of each year. The firm’s third year realizes cash flow 5% more than year 2. If the cost of capital of your business is 10%, and if the company reaches long-term growth by year 3 (at 5%), what is the present value of this business?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter7: Corporate Valuation And Stock Valuation
Section: Chapter Questions
Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...
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- In year 1 your new business earns $25,000 in cash flow to shareholders. In year 2 your business yields $32,000 in cash flow to shareholders. The money comes in at the end of each year. The firm’s third year realizes cash flow 5% more than year 2. If the cost of capital of your business is 10%, and if the company reaches long-term growth by year 3 (at 5%), what is the present value of this business?
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