A company's free cash flow was just FCF0 = $1.50 million. The weighted average cost of capital is WACC = 10.1%, and the constant growth rate is g = 4.0%. What is the current value of operations?

Question

Quizplus · Accepted Answer

$\begin{array}{lr}
\mathrm{FCF}_{0} & \$ 1.50 \
\mathrm{WACC}_{\mathrm{g}} & 10.1 \% \
\mathrm{FCF}_{1}=\mathrm{FCF}_{0}(1+\mathrm{g})= & 4.0 \% \
\mathrm{~V}_{\text {ops }}=\mathrm{FCF}_{1} /\left(\mathrm{r}_{\mathrm{S}}-\mathrm{g}\right) & \$ 1.56
\end{array}$

A Company's Free Cash Flow Was Just FCF0 = $1