Value of brooks operations


Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $80,000 and $100,000 for the next 2 years, respectively; and after the second year, it is expected to grow at a constant rate of 8%. The company's WACC is 12%. (A) What is the terminal, or horizon, value of operations? (hint: find the value of all free cash flows beyond year 2 discounted back to year 2) (B) Calculate the value of Brooks' operations.

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