CHAPTER 9 Enterprise Valuation PROBLEMS 9-1 ENTERPRISE VALUATION Opex Capital is a small investment advisory firm ocated in Portland, that has been hired by Winston Winery to estimate the value of Hi Wines. Hilco is a small winery that is being considered for purchase Winston. Opex has obtained the financial statements of Hilco and prepared the following estimates of the firm's free cash flow for the next five years: Cash Flows Year $100,000 120,000 135,000 150,000 175,000 At the end of five years, Opex has estimated that the winery should be worth approxi mately five times its Year 5 cash flow. a. the appropriate discount rate for valuing the winery is 15%,what is your estimate of the firm's enterprise value? b. Winston Winery plans to borrow $400,000 to help finance the purchase. What is Hilco's equity worth