If Bulldog Industries has a weighted average cost of capital of 10%,find the market value of the firm.(assume that we are at January 1,2004)

Name: If Bulldog Industries has a weighted average cost of capital of 10%,find the market value of the firm.(assume that we are at January 1,2004)
Brand: Quizplus
Rating: 4.8 (62 reviews)

Question

Quizplus · Accepted Answer

FCF 2005 = $80*1.10 = $88
FCF 2006 = $88 * 1.10 = $96.80
TV = $96.80 * 1.05 / (.1-.05)= $2,032.80
MV of FIRM = $80/1.10 + $88/(1.10)^2 + ($96.80+$2,032.80)/(1.10)^3

If Bulldog Industries Has a Weighted Average Cost of Capital