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Exercise

Calculating Present Value of Free Cash Flow to Equity

In the prior exercises, we calculated the Free Cash Flow to Equity (FCFE) projections from 2017 to 2021. In this exercise, we will discount these FCFE projections to the present. The object fcfe (FCFE for 2017 to 2021) and ke (discount rate of 10.5%) are stored in memory.

Instructions

100 XP
  • Add the number of discount periods for each cash flow.
  • Calculate the present value factor for each cash flow.
  • Calculate the present value of each cash flow.
  • Sum the present values of the cash flows.