Unformatted text preview: growth rate forever. The current market value of The Book Nook’s debt is 125% of par. 1. Using the sustainable growth rate model, what is the growth rate for The Book Nook that will be used for calculating the firm’s value? 2. Using the FCFF discounted cash flow formula, what is the Free Cash Flow to the Firm? 3. Using your answer for the FCFF from question 2 and the sustainable growth rate found in question 1, what is the firm value using the FCFF formula method of valuation? [Hint: Remember that the answer for question 2 is the FCFF so you need to use FCFF 1 in the numerator. To solve for FCFF 1 you use the formula: FCFF 1 = FCFF * (1+sustainable growth rate)]....
View Full Document
This note was uploaded on 01/04/2012 for the course BUSM 201 taught by Professor Jennlarson during the Fall '11 term at BYU.
- Fall '11