Homework answers / question archive / What is the value of operations at Year 3, Vop,3op,0 ? What is the current value of operations, V? How does the value of operations at Year 0 compare with the total net operating capital at Year 3, and what might explain this relationship? Free cash flow at beginning of the constant growth phase (FCF3) = $72

What is the value of operations at Year 3, Vop,3op,0 ? What is the current value of operations, V? How does the value of operations at Year 0 compare with the total net operating capital at Year 3, and what might explain this relationship? Free cash flow at beginning of the constant growth phase (FCF3) = $72

Finance

Share With

What is the value of operations at Year 3, Vop,3op,0

? What is the current value of operations, V? How does the value of operations at Year 0 compare with the total net operating capital at Year 3, and what might explain this relationship?

Free cash flow at beginning of the constant growth phase (FCF₃) = $72.300 Weighted average cost of capital (WACC) = 15.00%

Constant growth rate (g_L) = 6%

HV₃ = V_{op, 3} = $851.539

Present value of HV =  $559.901 Present value of free cash flows =  $247.218

Total value of operations at Year 0, V_{op, 0} = $807.119

Y3 Value of operation is 851.539, Current is 807.119. Difference is 44.42 and I don't know what explains the difference