Question

Vasudevan, Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 14% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.                           

Year	Free Cash Flow
1	$         (22.00)
2	$          42.00
3	$          45.00

Answer 1

The graisth nals of the tru carh flow year & to 3 ir 4-5-49 4 dircourt h 14. and Th fad that carh flour after year 3 ndofinidely wll grrew at 14 1 Prerent value of tt four ca Flowt The 49 4-5 4+ 4401 114 1+14 d-3 45.(1+7.14 1 t-4 (1+ 144) 4.5 (1 .7 19) (1447-14(+ 14 19.29 32.31 +30.40 + 82.00 + 4-5 1.0714 O.0 686) (1.14) 8 -00 F 474.53 556-53 So, Valur ob operations 556.53