Question: Time t=1 t=2 t=3 NOPAT 60 70 80 FCF 44 40 50 WACC =10%; g=2% (growth rate in perpetuity). Year 3 (t=3) is the beginning

Time t=1 t=2 t=3


NOPAT 60 70 80

FCF 44 40 50

WACC =10%; g=2% (growth rate in perpetuity). Year 3 (t=3) is the beginning of PERP.


Required:

a.


Use the FCF valuation model to compute the value of CORE (V) at t=0

b.


Use the RI valuation model to compute the value of CORE (V) at t=0, assuming the initial value of NOA is (i) 400 (NOA @ t=0), (ii) 100 (NOA @ t=0)

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