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COMM_V 370 101-108 2025W1 COMM 370 101 - 108 Midterm - Thursday, November 6, 2025 - Requires Respondus LockDown Browser

Numerical

Artic Corp is a private company with $3,000 in debt and $800 in excess cash. Analysts estimate that its core operations will generate an annual free cash flow of $350 next year and that the free cash flow will then grow 2% per year forever. They also estimate its WACC at 10%. The firm's estimated equity value (with one decimal) is: 

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We start by identifying the key inputs given in the problem: debt = 3,000, excess cash = 800, next year’s free cash flow (FCF1) = 350, perpetual growth rate g = 2%, and the weighted average cost of capital (WACC) = 10%. First, compute the enterp......Login to view full explanation

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