Calculate terminal or horizon value of operations

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Sony Corporation has never paid a dividend. The free cash flow (FCF) is projected to be $40,000 & $50,000 for the next two years, and after the second year it is expected to grow at a constant rate of 6 percent. The WACC is 11 percent.

What is the terminal or horizon value of operations in millions? (Hint: First find the value of all FCF's beyond year 2 that are discounted back to year 2.)

a. $2.0
b. $1.06
c. $1
d. $1.095
e. None of the above

What is the value of Sony Corporation operations?
a. 1,045,000
b. 932,000
c. 936,936
d. 1,090,000
e. None of the above

 

Reference no: EM1344620

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