Question: Problem 7 - 1 2 ( Value of Operations ) eBook Value of Operations Kendra Enterprises has never paid a dividend. Free cash flow is

Problem 7-12(Value of Operations)
eBook
Value of Operations
Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; after the second year, FCF is expected to grow at a constant rate of 7%. The company's weighted average cost of capital is 18%.
a. What is the terminal, or horizon, value of operations? (Hint: Find the value of all free cash flows beyond Year 2 discounted back to Year 2.) Round your answer to the nearest cent.
$
b. Calculate the value of Kendra's operations. Do not round intermediate calculations. Round your answer to the nearest cent.
$
Problem 7 - 1 2 ( Value of Operations ) eBook

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