The situation
Next-year recurring FCFF is ₹36 crore in the base case and ₹27 crore in downside. Both use 10% WACC and zero growth. The proposed operating price is ₹310 crore.
Your task
Is the price below modeled value in both scenarios?
Reveal step-by-step solution
Set up the problem
With flat perpetual cash flows starting in one year, divide each cash flow by 10%.
Work through the numbers
Base value is ₹360 crore. Downside is ₹270 crore. At ₹310 crore, the gaps are +₹50 crore and −₹40 crore relative to price.
Interpret the result
The price clears the base case and fails the downside. Identify what would protect value if the weaker cash flow materializes.
What to remember
Keep each scenario internally consistent. Explain which assumptions drive the valuation range and where the price sits.