Value of Operations
Brooks Enterprises has never paid a dividend. Free cash flow is projected to be $60,000 and $100,000 for the next 2 years, respectively; after the second year FCF is expected to grow at a constant rate of 5%. The company's weighted average cost of capital is 12%.
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.) Round your answer to the nearest dollar.
$
Calculate the value of Brooks' operations. Round your answer to the nearest cent.
$