What is the present value of the horizon value

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Problem

Reizenstein Technologies (RT) has just developed a solar panel capable of generating 200% more electricity than any solar panel currently on the market. As a result, RT is expected to experience a 19% annual growth rate for the next 5 years. By the end of 5 years, other firms will have developed comparable technology, and RT's growth rate will slow to 7% per year indefinitely. RT has a 12% weighted average cost of capital. The most recent annual free cash flow (FCF0) was $2.75 million. Calculate RT's expected FCFs for t = 1, t = 2, t = 3, t = 4, and t = 5. What is the horizon value at t = 5 (HV5)? What is the present value of the horizon value (HV5)? Get the instant assignment help. What is the present value of the free cash flows expected at t = 1, t = 2, t = 3 t = 4, and t = 5.

Reference no: EM133910320

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