Use the Information for the Question(s)below

question 28

Essay

Use the information for the question(s)below.
You expect DM Corporation to generate the following free cash flows over the next five years: Beginning with year six,you estimate that DM's free cash flows will grow at 6% per year and that DM's weighted average cost of capital is 15%.
-Calculate the enterprise value for DM Corporation.

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Definitions:

Days' Sales in Receivables

A financial metric that calculates the average number of days it takes a company to collect payment after a sale has been made.

Dishonored Note

A promissory note that has not been paid by the maker at its maturity date.

Interest Calculation

The process of determining the amount of interest earned or paid over a period of time on investments or loans.

Direct Write-Off Method

A method of accounting for bad debts that writes off an outstanding account receivable as a bad debt expense only when it becomes evident the debt is uncollectible.