Vrooom is a car dealership that determined the present value of its free cash flow to common equity for the first five years to be $272,000 and the present value in its terminal year to be $228,000. The expected growth rate is 2.2% and the firm’s cost of common equity is 4.2%. What is the terminal value of the dealership?

Vrooom is a car dealership that determined the present value of its free cash flow to common equity for the first five years to be $272,000 and the present value in its terminal year to be $228,000. The expected growth rate is 2.2% and the firm’s cost of common equity is 4.2%. What is the terminal value of the dealership?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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