Question

hi! If my firm's expecting a long-term growth of 3% and I am able to calculate the free cash flow next year, how can I go on to calculate the firm's value and later the value per share? Currently the company pays no dividends

Answer 1

You have to choose how many years you want to forecast your cash flow (like 4 or 5 years), and then obtain the residual value in the last year, that is dividing de last cash flow (for example year 4) by your (WACC - g), where g is the long term growth.