Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next years

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Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next years

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 years, respectively, after the second year For is expected to grow at a constant rate of 9%. The company's weighted average cost of capital is 13%.

a. What is the terminal, or horizon, value of operations?

b. Calculate the value of Kendra's operations.

business finance

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Answer 1

Answer #1

Given,

Free cash flow in 1 year (FCF1) = $80000

Free cash flow in 2 years (FCF2) = $100000

Growth rate (g) = 9% or 0.09

WACC (r) = 13% or 0.13

Solution :-

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Answer 2

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Kendra Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next years

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