EROIC & MVA of Constant Growth Firm:

13-4. A company has capital of $200 million. It has an EROIC of 9%, forecasted constant growth of 5%, and a WACC of 10%. What is its value of operations? What is its intrinsic MVA?

Value of Operations:

13-6. 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; after the second year, FCF is expected to grow at a constant rate of 8%. The companyâ��s weighted average cost of capital is 12%.

â�¢ What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2).

â�¢ Calculate the value of Brooksâ��s operations.

Corporate Valuation:

13-4. A company has capital of $200 million. It has an EROIC of 9%, forecasted constant growth of 5%, and a WACC of 10%. What is its value of operations? What is its intrinsic MVA?

Value of Operations:

13-6. 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; after the second year, FCF is expected to grow at a constant rate of 8%. The companyâ��s weighted average cost of capital is 12%.

â�¢ What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2).

â�¢ Calculate the value of Brooksâ��s operations.

Corporate Valuation:

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