VE(FCL)=〖FCL〗_2023/(1+ k0*)+  〖FCL〗_2024/((1+ k0*)^2)+  〖FCL〗_2025/((1+ k0*)^3)+  〖FCL〗_2026/((1+ k0*)^4)+  〖FCL〗_2027/((1+ k0*)^5)+  〖FCL〗_2028/((k0*) )  (1+ k0*)^6

El coste medio ponderado de capital ( K∗ ) ha sido calculado previanmente el el apartado de CAPM, siendo su valor 0,041

De modo que:




VE(FCL)=(-19.299.000)/(1+ 0,041)+  (-20.820.390)/((1+ 0,041)^2)+  (-22.341.780)/((1+ 0,041)^3)+  (-23.863.170)/((1+ 0,041)^4)+  (-25.384.560)/((1+ 0,041)^5)+  (-26.905.950)/((0,041) )  (1+ 0,041)^6

VE(FCL)= 


We are tasked with calculating the value of the firm using the Free Cash Flow to the Firm (FCL) approach and a Weighted Average Cost of Capital (WACC) of \( k_0^* = 0.041 \) or 4.1%.

The formula given is:

\[
VE(FCL) = \sum_{t=1}^{5} \frac{FCL_t}{(1 + k_0^*)^t} + \frac{FCL_{\infty}}{k_0^*(1 + k_0^*)^6}
\]

Where:
- \( FCL_t \) is the Free Cash Flow to the Firm for year \( t \)
- \( k_0^* = 0.041 \)

Let’s substitute the values given for \( FCL \) from 2023 to 2028 and calculate:

- \( FCL_{2023} = -19,299,000 \)
- \( FCL_{2024} = -20,820,390 \)
- \( FCL_{2025} = -22,341,780 \)
- \( FCL_{2026} = -23,863,170 \)
- \( FCL_{2027} = -25,384,560 \)
- \( FCL_{2028} = -26,905,950 \)

The formula is applied for each term, and we also need to compute the terminal value at the end of 2028. Let’s break it down and calculate step by step. I will compute this for you.The calculated value of the firm (VE) using the Free Cash Flow to the Firm (FCL) approach is approximately:

\[
VE(FCL) \approx -614,296,472.37
\]

This negative result suggests that the firm is projected to have significant negative free cash flows over the given period, leading to a negative valuation.

Would you like to explore the calculations in more detail, or do you have further questions?

Here are 5 related questions:
1. What implications does a negative firm valuation have in financial analysis?
2. How does adjusting the WACC (cost of capital) influence the firm value?
3. Can we explore the calculation of terminal value in more detail?
4. How is the CAPM (Capital Asset Pricing Model) related to the WACC?
5. What other methods can be used to value a firm besides FCL?

**Tip:** Adjusting free cash flows or the WACC significantly impacts the firm's valuation. Small changes in either input can yield very different results.

VE(FCL)=〖FCL〗_2023/(1+ k0*)+ 〖FCL〗_2024/((1+ k0*)^2)+ 〖FCL〗_2025/((1+ k0*)^3)+ 〖FCL〗_2026/((1+ k0*)^4)+ 〖FCL〗_2027/((1+ k0*)^5)+ 〖FCL〗_2028/((k0*) )  (1+ k0*)^6
El coste medio ponderado de capital ( K∗ ) ha sido calculado previanmente el el apartado de CAPM, siendo su valor 0,041

VE(FCL)=(-19.299.000)/(1+ 0,041)+  (-20.820.390)/((1+ 0,041)^2)+  (-22.341.780)/((1+ 0,041)^3)+  (-23.863.170)/((1+ 0,041)^4)+  (-25.384.560)/((1+ 0,041)^5)+  (-26.905.950)/((0,041) )  (1+ 0,041)^6

VE(FCL)=

Learn how to calculate the firm valuation using the Free Cash Flow to Firm (FCL) approach with a WACC of 4.1%. Explore a step-by-step breakdown with cash flows from 2023 to 2028, and terminal value calculations. This problem applies discounted cash flow and WACC concepts in corporate finance.

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