You are analyzing the firm Lipswich Film Corp. The firm fiscal year ended 30 September 2020, and you must estimate Lipswich Film Corp's value as of 1 October. You have the following actual and forecast year-end free cash flows:

FCFF(2019) 112000 FCFF(2020) 108000 FCFF(2021) 108000 FCFF(2022} 108000 FCFF(2023) 108000

In addition, you have estimated that the terminal growth rate should be 3%, the PE is 25, the beta is 1.23, the cost of equity is 10%, the after-tax cost of debt is 5%, the weight of debt is 60%, and the risk-free rate is 2%. What is the estimated Free Cash Flow to the Firm (FCFF) value?

Select one: A. 2091118 B. 2497926 C. None of these are correct D. 1534009 E. 1219315

Answer rating: 100% (QA)

Understanding the Approach Well use a discounted cash flow DCF valuation model Heres a breakdown of ... View the full answer