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Callie E Bonzo Kaplan University Graduate School of Business and Management GB550-03 - Financial Management: Theory and Practice Unit 6 Problems...
Hello,Attached is my project sheet. The question is 13-5. I have the answer, given, from our book; I just have to show the work. The excel within the document can be double clicked showing equation 13-4 from which the problem is based upon.Question: Chapter 13 – Question (13-5, p. 550)You are given the following forecasted information for the year 2014: sales = $300,000,000, operating profitability (OP) = 6%, capital requirements (CR) = 43%, growth (g) = 5%, and the weighted average cost of capital (WACC) = 9.8%. If these values remain constant, what is the horizon value (i.e., the 2014 value of operations)? (Hint: Use Equation 13-4.) Answer: 259,375,000Horizon value = HV2014 = [FCF2014 * (1+g)] / [WACC – g]
