It is December 2019. Google has offered to buy your internet startup. The Google negotiators and you
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It is December 2019. Google has offered to buy your internet startup. The Google negotiators and you both agree on the following expectations.
| Year | Expected free cash flow (end of year) |
| 2020 | 120,000 |
| 2021 | 180,000 |
| 2022 | 270,000 |
| 2023 | 360,000 |
| 2024 | 450,000 |
After 2024, cash flows are expected to grow by 5% per year. Based on the riskiness of your industry, you think that your weighted average cost of capital is 15%.
You have bank loans worth $400,000 outstanding.
What is the horizon value, i.e., the present value of all free cash flows from 2025 to infinity expressed in 2024 dollars?
What is the total value of the company?
What is the value per share of common stock if you have 100,000 shares outstanding?
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Related Book For 
An Introduction to Statistical Methods and Data Analysis
ISBN: 978-1305269477
7th edition
Authors: R. Lyman Ott, Micheal T. Longnecker
Posted Date:
