Calculate the intrinsic value of the home appliance industry

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The Home Appliance Industry had free cash flow to equity (FCFE) of $87 for the most recent year ending reported yesterday. The industry anticipates a growth rate of 8% for the next three years due to favorable economic conditions. However, the growth rate is expected to decline to 4% after three years and remain at that level indefinitely. The required rate of return is 12% for this industry

a) Calculate the FCFE at the end of the 8% growth period three years from now.

b) Calculate the intrinsic value of the Home Appliance Industry today.

Reference no: EM131308095

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