Misra Inc. forecasts a free cash flow of $50 million in Year 3, ie, at t=3,...

 

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Misra Inc. forecasts a free cash flow of $50 million in Year 3, ie, at t=3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 9.5% and the cost of equity is 13.5%, then what is the horizon, or continuing, value in millions at t = 3? Misra Inc. forecasts a free cash flow of $50 million in Year 3, ie, at t=3, and it expects FCF to grow at a constant rate of 5.5% thereafter. If the weighted average cost of capital (WACC) is 9.5% and the cost of equity is 13.5%, then what is the horizon, or continuing, value in millions at t = 3?

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Continuing value can be computed as Free ca... View the full answer