Suppose the risk of the company changes based on an unanticipated decrease in the Free Cash Flows by 10% annually during the years 2015, 2016, and 2017.
What are the implications of the change in present value based on risk? In other words, what does the change mean to the company, and how would a financial manager interpret it?
Extracted text: A1. Interest Rate 8% FCF - 2015 FCF -2016 FCF -2017 6,082.00 FCF - Years Amounts* 6,007.00 3,573.00 Pv* (5,631.48)(5,150.03) (2,836.36) Total Pv* |(13,617.88) *In millions Pv=FVN/(1+I)^N PV(,N,0,FV) The PV is NOT a negative number. It is a posiive number. This negative values calculated here are a result of the PV formula only
Extracted text: A2. Interest Rate 8% FCF - Years Amounts* FCF - 2015 FCF - 2016 FCF - 2017 5,406.30 10% Decrease 3,215.70 5,473.80 (5,068.33) (4,635.03) (2,552.73) Pv* (12,256.09) Total Pv* In millions Pv=FVN/(1+I^N PV(I,N,0,FV) Present Value of Company $12,256.09 *The PV is NOT a negative number. It is a posiive number. This negative values calculated here are a result of the PV formula only