What will be the market value of the firm''s common equity

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Reference no: EM131188734

Company D has historical growth in its free cash flows of 4% with little variability. You expect that free cash flows will grow 3% in Year 1, 5% in Year 2, 7% in years 3 to 5, and 5% thereafter.

The firm's last free cash flow was $175,000. The firm has a required rate of return of 10%. The book value of operating assets is $1,000,000. The market value of non-operating assets is $900,000. The market value of the firm's debt is $1,500,000 and the market value of the preferred stock is $500,000.

What will be the market value of the firm's common equity?

Reference no: EM131188734

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