Answer:
current value = $25.5738 Million
so correct option is e. $25.57 million
Explanation:
given data
free cash flow FCF0 = $1.50 million
weighted average cost of capital WACC = 10.1 %
constant growth rate g = 4.0%
to find out
current value of operations
solution
we apply here formula for current value that is express as
current value = [tex]\frac{FCFO(1+G)}{WACC-G}[/tex] ..................1
put here value we get
current value = [tex]\frac{FCFO(1+G)}{WACC-G}[/tex]
current value = [tex]\frac{1.50 (1 + 0.04)}{(0.101 - 0.04)}[/tex]
current value = [tex]\frac{1.50*1.04}{0.061}[/tex]
current value = $25.5738 Million
so correct option is e. $25.57 million
