The equation that my book gives is
Value of stockholders' equity = FCF1/(1+r)+FCF2/(1+r)^2... +FCFn/(1+r)^n+TVn/(1+r)^n
where FCF1, FCF2, and FCFn denote free cash flows received at the end of future periods. N is the end of the life of the firm.
TV is the terminal value
It gives this simplified equation if free cash flows are equivalent to cash from operations. And the cash flows are the same for all periods.
FCF X ((1-(1+r)^-n)/r)
The inputs are
FCF 500
TV 2000
n 10 years
r 15%
Using the simplified method I had 2509.38
Using the long method I had 3003.75
of course these were rounded.
Can anybody give me some tips?