If a firm has a free cash flow equal to $50 million and that cash flow is expected to grow at 3% forever,what is the total firm value given a WACC of 9.5%?

Question

Quizplus · Accepted Answer

To calculate the firm value, we use the formula: 
Firm value = Free cash flow / (WACC - growth rate) 
Plugging in the given values, we get: 
Firm value = 50 / (0.095 - 0.03) = 769 
Therefore, the total firm value is $769 million. The correct answer is C.

If a Firm Has a Free Cash Flow Equal to $50