Help calculation
Future Cash Flows = £200
WACC = 10%
How much should I pay for this businessCan I just confirm what to put for this please?
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Anybody? Plz
You would put in 200/.1 = $2000 dollars
Your WACC is the return threshold you demand. Therefore, you will earn $200 of cash flow on your $2000 investment (or 10% return annually).
Thanks, but just to clarify the exact question is:
“You have the opportunity to purchase a series of cash flows that are £200 in perpetuity. If the WACC is 10%, how much would you pay today?”
Is your answer still valid?
Sorry I should of wrote down the whole question to begin with
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