2. Sisyphus Corp. has projected that their performance for the next five years result to the following: Cash Operating Expenses 30 33.00 ΥEAR Revenue 50 55.00 60.50 66.55 73.21 1 3 36.30 4 39.93 5 43.92 Terminal value was assumed based on the growth rate of the cash flows. Annual Capital investment requirement is at P2 million. Income Tax rate is at 30%. The required rate or return for their business is 14%. Requirement: a. Compute for the growth rate b. How much is the Terminal Value? c. How much is the Free Cash Flow for years 1-5? d. How much is the Discounted Net Cash Flows to the Firm for years 1-5?

2. Sisyphus Corp. has projected that their performance for the next five years result to the following: Cash Operating Expenses 30 33.00 ΥEAR Revenue 50 55.00 60.50 66.55 73.21 1 3 36.30 4 39.93 5 43.92 Terminal value was assumed based on the growth rate of the cash flows. Annual Capital investment requirement is at P2 million. Income Tax rate is at 30%. The required rate or return for their business is 14%. Requirement: a. Compute for the growth rate b. How much is the Terminal Value? c. How much is the Free Cash Flow for years 1-5? d. How much is the Discounted Net Cash Flows to the Firm for years 1-5?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter21: Dynamic Capital Structures And Corporate Valuation

Section: Chapter Questions

Problem 9P

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