A firm has projected free cash flows of $575,000 for Year 1, $625,000 for Year 2, and 750,000 for Year 3. The projected terminal value at the end of Year 3 is $8,000,000. The firm’s WACC is 12.5%. What is the DCF value of the firm?
What will be an ideal response?
575,000/1.125 + 625,000/1.125^2 + 750,000/1.125^3 + 8,000,000/1.125^3 = $7,150,343
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