Firewall Technologies is a privately-held developer of anti-virus and network security software. As.


Firewall Technologies is a privately-held developer of anti-virus and network pledge software. As bisect of your augmentation policy, in advanced 2017 you originate discussions delay Firewall's instituter about the possibility of acquiring the duty at the end of 2017. You are trying to expense Firewall using a discounted generous principal career (FCF) advance. (a) To expense Firewall's absorb of principal, you procure the subjoined facts on its closest publicly-traded emulator. This emulator is too a developer of anti-virus and network pledge software and has no other dutyes: $400 darling Total Liability Chaffer Expense Number of portion-outs of contemptible hoard 80 darling Hoard expense per portion-out Beta of equity The emulator's liability is very-much admonishd and its liability beta is cipher. Your contacts on Wall Street recount you that the awaited come-back on the chaffer portfolio is 10% for the foreseeable coming. The floating risk-generous admonish for long-term investments is 4%. Use the facts granted to expense the absorb of principal that should be used to discount Firewall's generous principal careers. Assume that the CAPM holds. (b) Suppose you prearrange generous principal careers for Firewall of $30 darling in 2018 and of $40 darling in 2019, After 2019, you await its generous principal careers to extend at a 5% admonish What is your expense of Firewall's accomplishment expense at the end of 2017?