FCF and PV
Valuing a Business
HH rHH
PV
r
FCF
r
FCF
r
PV FCF
( 1 ) ( 1 )
...
( 1 ) ( 1 )^2
11 2
+
+
+
+ +
+
+
+
=
PV (free cash flows) PV (horizon value)
FCF and PV
Valuing a Business
HH rHH
PV
r
FCF
r
FCF
r
PV FCF
( 1 ) ( 1 )
...
( 1 ) ( 1 )^2
11 2
+
+
+
+ +
+
+
+
=
PV (free cash flows) PV (horizon value)