Google Answers: finance

View Question

Q: finance ( No Answer, 1 Comment )

Question

Subject: finance
Category: Business and Money > Finance
Asked by: csalmon74-ga
List Price: $2.00

Posted: 17 Mar 2005 10:58 PST
Expires: 24 Mar 2005 12:58 PST
Question ID: 496246

If a company's most recent free cash flow was $100 million and is
expected to grow at a constant rate of 5 percent. If the company's
weighted average cost of capital is 15 percent, what is the current
value of operations?

Answer

There is no answer at this time.

Comments

Subject: Re: finance
From: jbp_1997-ga on 19 Mar 2005 20:21 PST

use the Gordon growth formula for a growing perpetuity:  

cash flow / (cost of capital - growth rate of cash flows)

100 / (.15 - .05) = 1,000

Answer: $1 billion

Important Disclaimer: Answers and comments provided on Google Answers are general information, and are not intended to substitute for informed professional medical, psychiatric, psychological, tax, legal, investment, accounting, or other professional advice. Google does not endorse, and expressly disclaims liability for any product, manufacturer, distributor, service or service provider mentioned or any opinion expressed in answers or comments. Please read carefully the Google Answers Terms of Service.

If you feel that you have found inappropriate content, please let us know by emailing us at answers-support@google.com with the question ID listed above. Thank you.

Search Google Answers for

Google Home - Answers FAQ - Terms of Service - Privacy Policy