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example vbm - operation 3 Using the corporate valuation...

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Example FCF. 1. EMC Corp’s current free cash flow is $400,000 and is expected to grow at a constant rate of 5%. WACC = 12%. Calculate EMC’s value of operations. Vop = FCF1 / (WACC – g ) 2. Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively, and after the second year it is expected to grow at a constant rate of 8 percent. The company’s WACC is 12%. What is the terminal, or horizon value of operations (hint: constant cash flow part) and value of
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Unformatted text preview: operation? 3. Using the corporate valuation model, the value of a company’s operations is $750 million. The company’s balance sheet shows $50 million in short-term investment. The company also has $100 m in note payable, $200 m in long-term debt, $ 40 m in common stock and 160 m in retain earnings. What is your best estimate for the market value of equity? NP 100 LTD 200 CE 40 RE 160 V = Vop + Vnop Vof equity = V – preferred stock - Debt...
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