Smoothtone Products manufactures sound systems. The Company’s weighted average cost of capital is 15% The company forecasted the following free cash flows for the next 20 years.
Year 1 $10,000,000
Year 2 $15,000,000
Year 3 $20,000,000
Year 4 $22,000,000
Year 5 – $25,000,000
Year 6-10 – $20,000,000
Year 11-20 $15,000,000
Use the Discounted Cash Flow approach to value the smoothtone products company.
*I am having a difficult time finding the PV factor. I have calculated the average at $42,333,333. but am not sure where to go from there. Please help.
