241 presents a good example of such calculation of the net free cash flows).
The main formulas used in the formula approach are formulas for valuing the free cash flows under four different scenarios:
Example: Free cash flow in Year 0= $20; for 2 years growth is expected to be at 30%, then no growth; WACC=12% V=$20 *(1+0.3)/(1+0.12) + $20 (1+0.3)^2)/(1+0.12)^2 + [$20 (1+0.3)^2)/0.12] /(1+0.12)^2
The Exxon-Mobil combination is an archetype of a successful merger. Using this example, you will be able to see the application and the validity of different methods of valuation, to review the major types of merger motivations, and to test the merger performance. View More »