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Additional Valuation Assumptions: Interest rate on debt capital 6.00% Tax rate 25.00% Cost of equity capital...

Additional Valuation Assumptions:
Interest rate on debt capital 6.00%
Tax rate 25.00%
Cost of equity capital 14.00%
Terminal growth rate in cash flows 3.00%
Free Cash Flows to Equity for 18-20
2018 2019 2020
8,120 14,024 15,295

1.) Using your Free Cash Flows to Equity calculated above, determine the Value of Equity as of December 31, 2017 using a MULTI-PERIOD model.

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Answer #1

D1 = 8120

D2=14024

D3=15295

Po = 8120/(1.03)+14024/(1.03)(1.03)+15295/(1.03)(1.03)(1.03)

Po = 7883.495+13218.965+13997.0916

= 35099.5516 or 35100

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