Question: please show work so i can see how to do problem and round to nearest cent Free cash flow valuation you are evaluating the potential
Free cash flow valuation you are evaluating the potential purchase of a small business with no debt or preferred stock that is currently generating 542 200 of free cash flow (FCFo= $42.200). On the basis of a review of similar risk investment opportunites, you must earn an) 20% rate of return on the proposed purchase Because you are relatively uncertain about future cash flows you decide to estimate the firm's valuo using several possible assumptions about the growth rate of cash flows a. What is the firm's value of cash flows are expected to grow at an annual rate of 0% from now to infinity? b. What is the firm's value if cash flows are expected to grow at a constant annual rate of 8% from now to infinity? c. What is the firm's value if cash flows are expected to grow at an annual rate of 11% for the first 2 years, followed by a constant annual rate of 8% from your 3 to infinity
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