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18 April, 06:27

Mooradian Corporation's free cash flow during the just-ended year (t = 0) was $250 million, and its FCF is expected to grow at a constant rate of 5.0% in the future. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 12.5%, what is the firm's total corporate value, in millions?

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  1. 18 April, 07:25
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    the firm's total corporate value is 3.500.000.000

    Explanation:

    Consider the following formula to calculate the corporate value of the firm

    Firm Total Corporate Value = Free cash flow (T1) / Ke - G

    = 250.000.000 (1+0.05) / 12.5%-5%

    = 3.500.000.000
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