Income approaches: You are valuing the equity of a company using the FCFE approach and have estimated that the FCFE in the next three years will be $6.25, $7.70, and $8.36 million, respectively. Beginning in year 4, you expect the cash flows to increase at a rate of 4 per cent per year for the indefinite future. You estimate that the cost of equity is 12 per cent. What is the value of equity in this company?

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The Answer of Income approaches: You are valuing the equity of a company using the FCFE approach and have estimated that the FCFE in the next three years will be $6.25, $7.70, and $8.36 million, respectively. Beginning in year 4, you expect the cash flows to increase at a rate of 4 per cent per year for the indefinite future. You estimate that the cost of equity is 12 per cent. What is the value of equity in this company?

Income Approaches: You Are Valuing the Equity of a Company