1. Describe each of the following valuation methods is calculated and individually identify the problems of methods (b) through (e): a. NPV b. IRR c. MIRR d. Pay Back e. Profitability Index
2. Zhdanov Inc. forecasts that its free cash flow in the coming year, i.e., at t = 1, will be -$10 million, but its FCF at t = 2 will be $20 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14%, what is the firm's value of operations, in millions?
$158
$167
$175
$184
$193