Question: Question Workspace Check My Work eBook Problem Walk-Through Unlevered Value Richter Manufacturing has an 8% unlevered cost of equity. Richter forecasts the following free cash

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Problem Walk-Through

Unlevered Value

Richter Manufacturing has an 8% unlevered cost of equity. Richter forecasts the following free cash flows (FCFs), which are expected to grow at a constant 5% rate after Year 3.

Year 1 Year 2 Year 3
FCF $800 $830 $890

  1. What is the horizon value of the unlevered operations? Do not round intermediate calculations. Round your answer to the nearest dollar.

    $

  2. What is the total value of unlevered operations at Year 0? Do not round intermediate calculations. Round your answer to the nearest dollar.

    $

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