What is the fair market value of the company

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Question

Underline Electronics had a free cash flow for FY 2018 of $2,150 (all amounts are in $000). Rand McDandy, CEO, projected a free cash flow growth of 3% per year for the next 5 fiscal years (FY2019 - FY2023).

Beginning at the end of FY2023, free cash flow was expected to slow grow at only .5% in perpetuity. McDandy expected Underline Electronics cost of capital to remain constant at 6.12% until the end of FY2023.

He also projected that beginning in FY2024 the cost of capital will lower 4.25% and remain at 4.25% in perpetuity. What is the fair market value (NPV) of the company?

Reference no: EM132344538

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