"Kim is projecting LTG, Inc.'s cash flows using the percentage of sales method. She projects that the sales and the NOPAT for the next 3 years will be according to the table below and after that both the sales and the NOPAT will grow at 5% per year forever. Year 0 represents the firm's most recent year. The firm's Net PPE is expected to be at 20% of the same year's sales. The operating NWC is projected at 6% of the same year's sales. What is the value of the firm if the cost of capital is 10%?

Year	0	1	2	3
Sales	1000	1000	1200	1100
NOPAT	200	220	250	240

Answer rating: 100% (QA)

To calculate the value of the firm we need to determine the free cash flows FCF for each year discount them to their present value using the cost of c... View the full answer