A financial analyst with MTC International has estimated the annual after-tax free cash flow from a proposed

Question:

A financial analyst with MTC International has estimated the annual after-tax from a proposed merger to be $1.5 million. This cash flow is expected to continue for 10 years. For the following 5 years, the is estimated to be $0.7 million per year. MTC International feels that the appropriate risk-adjusted is 16 percent. Calculate the present value of the expected free cash flows from the proposed merger through year 15.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... 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...