This assessment is based on the Radio One Case attached. Questions. What price should Radio One offer based upon a discounted cash flow analysis? Are the cash flows in the exhibits reasonable? Note: Bear in mind that the company is likely to finance with equity only as it does not seem to rely on debt. The WACC to be used for the DCF valuation would therefore be cost of equity only. To calculate the relevant cashflows: OCF+ NWC investment+ Capital expenditure Remember also to include a terminal value in your DCF in the final period. Failure to do so will severely impact your results. It should be calculated as a growing perpetuity of the 2004 cashflow.
