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17 November, 20:13

Tropetech Inc.'s FCFs are expected to grow at a constant rate of 4.62% per year in the future. The market value of Tropetech Inc.'s outstanding debt is $4,894 million, and its preferred stocks' value is $2,719 million. Tropetech Inc. has 225 million shares of common stock outstanding, and its weighted average cost of capital (WACC) equals 13.86%. Find the total firm value?

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  1. 17 November, 23:11
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    The total firm value is $10,877 million

    Explanation:

    Value of Firm = Expected FCF / (WACC - Growth Rate)

    = $1,005 million / (0.1386 - 0.0462)

    = $1,005 million / 0.0924

    = $10,877 million

    Therefore, The total firm value is $10,877 million
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