A firm's cash flow this year was $3,100. Cash flows are expected to grow at 30% for the next two years and then taper off to a growth rate of 9% indefinitely. The beta of the firm is 1.2, and
The relevant risk-free rate is 4%. The equity risk premium is expected to be 6%. What is the
Firm's terminal value at the end of the second year? Round your answer to the nearest dollar.

Question

Quizplus · Accepted Answer

The Answer of A firm's cash flow this year was $3,100. Cash flows are expected to grow at 30% for the next two years and then taper off to a growth rate of 9% indefinitely. The beta of the firm is 1.2, and
The relevant risk-free rate is 4%. The equity risk premium is expected to be 6%. What is the
Firm's terminal value at the end of the second year? Round your answer to the nearest dollar.

A Firm's Cash Flow This Year Was $3,100