A company's free cash flow per was just $3.00 million. If the expected long-run growth rate for this company is 5 percent, and if the WACC is 11 percent then what is the value of the entire firm's operations, in millions?

Question

Quizplus · Accepted Answer

The value of the company's operations can be found using the formula:

Enterprise Value = Free Cash Flow / (WACC - Growth Rate)

Plugging in the given values:

Enterprise Value = $3.00 million / (0.11 - 0.05) = $52.50 million

Therefore, the answer is C, $52.50 million.

A Company's Free Cash Flow Per Was Just $3