Question: 1. USING DCF TO COMPUTE ENTERPRISE VALUE AND BOOK VALUE Using the information from APPLYING THE DISCOUNTED CASH FLOW METHOD OF BUSINESS VALUATION (Mergers, Acquisitions

1. USING DCF TO COMPUTE ENTERPRISE VALUE AND BOOK VALUE

Using the information from APPLYING THE DISCOUNTED CASH FLOW METHOD OF BUSINESS VALUATION (Mergers, Acquisitions and Corporate Restructurings Patrick A Gaughan, page 569-570), answer the following question.

Year123456

FCFs

$27 500 000

$30 100 000

$32 800 000

$35 400 000

$37 900 000

$40 200 000

WACC (r) = 15%
Growth rate (g) = 7%
Market Value of Debt & Preferred Equity = $100 000 000
Shares Outstanding = 40 000 000

Calculate the capitalization rate (1)
Calculate the terminal value (2)
Calculate the Total Enterprise Value (TEV) (5)
Calculate the share price (2)

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