Wurall Jan 2004

This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.

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November 12, 2014 at 4:58 pm #209412
stacie395
Participant
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Hi sir, i wonder why for the valuation of the firm, we do not need to discount using its WACC of 11%…?

Secondly, when we calculate the free cash flow for years 20X5 to 20X8, shouldn’t we calculate their present values…?

Thanx…
November 12, 2014 at 6:17 pm #209445
John Moffat
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We are discounting – when there is an inflating perpetuity we use the growth model to calculate the PV.

Why would we want to calculate the PV’s for the years 20X5 to 20X8? Note (k) of the questions wants us to calculate the value in 4 years time.
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