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Homework answers / question archive / The firm enters into a new contract that yields $4 million per quarter (3 months) of free cash flow (assumes 100% margins and no taxes) for 4 years

The firm enters into a new contract that yields $4 million per quarter (3 months) of free cash flow (assumes 100% margins and no taxes) for 4 years

Finance

The firm enters into a new contract that yields $4 million per quarter (3 months) of free cash flow (assumes 100% margins and no taxes) for 4 years. What is the value of this contract? The quarterly required return is 2.5%.

 

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So, Total Value of the contract is 52,220,010.64