Utility just went through a rate-increase process

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An equity analyst needs to value a regulated utility. The utility just went through a rate-increase process, and there will not be another rate increase in the next five years. You have projected that the company will generate a cash flow of $87.5 million a year for the next five years, and then $95.5 million a year for the period thereafter. If the relevant discount rate is 12.5%, what is the value of the utility? And what would be the value if you assumed that the cash flows after year 5 would grow at a constant rate of 2% indefinitely?

Reference no: EM132079642

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