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Show all work: Stanley Co intends to have a cash flow of $45 million for the...

Show all work: Stanley Co intends to have a cash flow of $45 million for the next year. The organization's rate of return is 10%. Cash flows are expected to grow at 5% indefinitely. If the company has $100,000,000 in debt and 50,000,000 shares, what is the value of the firm when using the constant growth model?

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Answer #1

To calculate the value of the firm, we have used constant growth model formula. also we have assumed the cash flow occuring is free cash flow occuring to the firm

Cash flow occuring next year rate of return 45,000,000.00 10% Growth rate 5% Value of the firm = Free cash flow (Next year)/(

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