When calculating FCFF, should I always apply revenue growth when given? I didn’t think so, but that is how it’s done in Schweser Practice Exams Vol 2, Exam 3 Q39:
- Current Revenues: $22,000,000
- Revenue Growth: 7%
Please note this is not in reference to single-stage model FCFF1/(WACC-g)…they just asked for FCFF. The only ‘trick’ I may see is that the firm was “previously considered for possible purchase by a competitor.” They don’t mention how many years ago etc. But, would I usually apply growth?