Calculating the Present Value of Free Cash Flow to Equity for Coca-Cola
|
FCFE0 |
$7,470 |
|
|
RROR |
9.00% |
|
|
g |
3.88% |
|
|
(k – g) |
5.12% |
|
|
g* |
14.09% |
|
|
Years |
5 |
|
|
Year |
FCFEt ($) |
PV(FCFEt) |
|
2013 |
7,470 |
|
|
2014 |
8,522 |
7,818 |
|
2015 |
9,722 |
8,182 |
|
2016 |
11,092 |
8,564 |
|
2017 |
12,654 |
8,963 |
|
2018 |
14,437 |
9,381 |
|
2019 |
14,997 |
|
|
PV5 |
292,715 |
|
|
PV(P5) |
|
190,201 |
|
PV0 |
|
$233,109 |
FCFE0 = free cash flow to equity at time zero. FCFE is used as the initial cash flow, FCFE0.
FCFEt = the FCFE at each year in the future. FCFE1 to FCFE5 grow at the super-normal growth rate. We use a super-normal growth rate of 13.43 percent, which is the average ...
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