posted a question
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 company�s weighted average cost of capital is 12%.
� 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).
� Calculate the value of Brooks�s operations.
Corporate Valuation: