Doric Co (PILOT 12)

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February 18, 2021 at 9:55 am #610837
Jiya024
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Dear John sir,

In this question’s part c) I do admit that $50m is only a one time investment in NCAs, and so won’t be deducted from operating cash flow to arrive at FCF to firm, on which growth till perpetuity is applied.

But I certainly feel that at least when we have found out the MV of firm, after that we should deduct the $50m. but we haven’t done so. why?

Sincere Regards,
February 18, 2021 at 2:33 pm #610858
John Moffat
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But investing $50 does not make the value of the firm any lower. The value of the firm is higher because of the growth being generated from the $50.
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