Valuation impact of changes in forecast period growth rates

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1. [Valuation Impact of Changes in Forecast Period Growth Rates] New information for the Gamma Systems Manufacturing Corporation has been brought to the management's attention.  Use the financial statement information in Problem 5 and take into consideration that sales will grow at a 15 percent rate in 2011 and a 10 percent rate in 2012 before settling down to a 6 percent perpetuity growth rate.

A.     Estimate the free cash flows available to equity investors for 2011, 2012, and 2013.

B.     Estimate the terminal value of all future cash flows at the end of 2012.

C.     Estimate of the value of Gamma Systems at the end of 2010 under these assumptions.

Reference no: EM13560472

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