ABCDEFGHIJKLMNOPQRSTUVWXYZ
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XYZ COMPANY
CASH FLOWS		ANSWER/
TABLE
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SERIAL
YEAR CASH FROM
OPERATING ACTV. (FV)		CAPITAL
EXPENDITURE		FREE CASH
FLOWS (FV)		DISCOUNTING FORMULAYEAR FREE CASH
FLOWS (PV)		YEAR Net profit
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1YR1 $ 100,000.00 $ 50,000.00 $ 50,000.00 YR1 $ 46,296.30 YR1 $ 225,000.00
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2YR2 $ 150,000.00 $ 53,000.00 $ 97,000.00 YR2 $ 83,161.87 YR2 $ 236,250.00
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3YR3 $ 95,000.00 $ 56,180.00 $ 38,820.00 YR3 $ 30,816.57 YR3 $ 248,062.50
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4YR4 $ 200,000.00 $ 59,550.80 $ 140,449.20 YR4 $ 103,234.35 YR4 $ 260,465.63
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5YR5 $ 150,000.00 $ 63,123.85 $ 86,876.15 YR5 $ 59,126.45 YR5 $ 273,488.91
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6YR6 $ 175,000.00 $ 66,911.28 $ 108,088.72 YR6 $ 68,114.23 YR6 $ 287,163.35
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7YR7 $ 180,000.00 $ 70,925.96 $ 109,074.04 YR7 $ 63,643.66 YR7 $ 301,521.52
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8YR8 $ 190,000.00 $ 75,181.51 $ 114,818.49 YR8 $ 62,032.86 YR8 $ 316,597.60
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9YR9 $ 210,000.00 $ 79,692.40 $ 130,307.60 YR9 $ 65,186.24 YR9 $ 332,427.47
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10YR10TERMINAL VALUE $ 3,490,488.49 YR10 $ 1,616,771.54 YR10 $ 349,048.85
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 Total $ 4,365,922.69 Intrinsic Value / NPV $ 2,198,384.05 Total $ 2,830,025.82
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AssumptionsANSWER/
FORMULA		 $ 2,198,384.05
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1XYZ Cost of Capital / Discount rate 8%
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2Cash flows will be generated for 10 years
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3Terminal value is 10 times of Tenth year net profit
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Net profit for year1 is $ 225,000.00 and it's forecast to grow at 5% anually
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Capital expenditure for first year is 50,000.00 and supposed to increase at 6% annually
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Required:
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Calculate the value of XYZ company?
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