The US Feed, a chain of Pet Supply Stores had a free cash flow for FY...

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The US Feed, a chain of Pet Supply Stores had a free cash flow for FY 2020 of $6,250 (all amounts are in $000). Chester Smart, CEO, has developed a long-term annual free cash flow projection - a copy of which has been reproduced in the table below. Growth rate Cost of Capital FY2021-FY2025 3.2% 4.25% FY2026-FY2029 2.5% 5.20% FY2030 to perpetuity 1.5% 5.75% Considering this forecast he asked his CFO (you) to determine the company's valuation using the NPV (net present value) method. For this question consider FY2021 as Year 1 and FY2025 as Year 5, and FY2029 as year 9. The US Feed, a chain of Pet Supply Stores had a free cash flow for FY 2020 of $6,250 (all amounts are in $000). Chester Smart, CEO, has developed a long-term annual free cash flow projection - a copy of which has been reproduced in the table below. Growth rate Cost of Capital FY2021-FY2025 3.2% 4.25% FY2026-FY2029 2.5% 5.20% FY2030 to perpetuity 1.5% 5.75% Considering this forecast he asked his CFO (you) to determine the company's valuation using the NPV (net present value) method. For this question consider FY2021 as Year 1 and FY2025 as Year 5, and FY2029 as year 9.

Answer rating: 100% (QA)

To determine the net present value NPV of the companys cash flows we need to discount each projected ... View the full answer