Current and projected free cash flows for Radell Global Operations are shown bel

Question

Current and projected free cash flows for Radell Global Operations are shown below. Actual 2018 2019 2020 2021 $616.80 $677.48 $717.53 $760.58 Projected Free cash flow (millions of dollars) Growth is expected to be constant after 2020, and the weighted average cost of capital is 11.35%, what is the horizon (continuing) value at 2021 if growth from 2020 remains constant? Do not round intermediate calculations. Enter your answer in millions. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number. million

Explanation / Answer

growth rate = 760.58/717.53 - 1 = 6.00%

horizon value at 2021 = 760.58 * 1.06/(0.1135 - 0.06)

horizon value at 2021 = 15,069.44

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