Fortuna Footwear wishes to assess the value of its Active Shoe Division. This division has debt...
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Fortuna Footwear wishes to assess the value of its Active Shoe Division. This division has debt with a market value of $ 12,500,000 and no preferred stock. Its weighted average cost of Capital (WACC) is 10%. The Active Shoe Division's estimated free cash flow each year from 2016 through 2019 is given in the following table. Beyond 2019 to infinity, the firm expects its free cash flow to grow at 4 % annually. Use the free cash flow valuation model to estimate the value of Fortuna's entire Active Shoe Division. Year (t) 2016 2017 2018 2019 FCF (t) $ 800,000 1,200,000 1,400,000 1,500,000 Fortuna Footwear wishes to assess the value of its Active Shoe Division. This division has debt with a market value of $ 12,500,000 and no preferred stock. Its weighted average cost of Capital (WACC) is 10%. The Active Shoe Division's estimated free cash flow each year from 2016 through 2019 is given in the following table. Beyond 2019 to infinity, the firm expects its free cash flow to grow at 4 % annually. Use the free cash flow valuation model to estimate the value of Fortuna's entire Active Shoe Division. Year (t) 2016 2017 2018 2019 FCF (t) $ 800,000 1,200,000 1,400,000 1,500,000
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The free cash flow valuation model is used to estimate the value of a companys assets by taking into consideration the cash flow generated from the assets The free cash flow valuation model takes into ... View the full answer
Related Book For
Principles of Managerial Finance
ISBN: 978-1408271582
Arab World Edition
Authors: Lawrence J. Gitman, Chad J. Zutter, Wajeeh Elali, Amer Al Roubaix
Posted Date:
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