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If net income is expected to be $6,000 and interest expense is $1,500, the financial cash flow (FCF) would then be $7,500, given no adjustments for capital expenditures, depreciation, and working capital. Using FCF, we can value an enterprise by discounting at the weighted average cost of capital (WACC), which is a rate of risk that is estimated to affect both types of investors – debt investors and equity investors. If WACC is used as the discount rate, the result would be a measure of value called “value of invested capital.” Given the FCF growth rate is 3% forever, what is the value of invested capital for this opportunity?

WACC Rate not given. Question includes all information available.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92844420

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