Sharapova Inc forecasts a free cash flow of $35 million in Year 3, i e , at t 3, and it expects FCF to grow at a constant rate of 5 5 thereafter If the weighted average cost of capital (WACC) is 10 0 and the cost of equity is 15 0 , what is the horizon, or continuing, value in millions at t 3 ...

Computation of the horizon Given information Free Cash Flow 35 Mill ...

Sharapova Inc. forecasts a free cash flow of $35 million in Year 3, i.e., at t =

Question:

Sharapova Inc. forecasts a of $35 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average (WACC) is 10.0% and the is 15.0%, what is the horizon, or continuing, value in millions at t = 3?
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the... Free Cash Flow
Free cash flow (FCF) represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. Unlike earnings or net income, free cash flow is a measure of profitability that excludes the...