Beginning in 2009, it's reasonable to expect free cash to grow by 12% a year for the next four years. Given Mohawk's dominance, I think it will be much more, but let's be conservative. Let's also assume a discount rate of 10%. For a business as strong as Mohawk, 10% might be a notch too high but the goal is to get a really conservative valuation. The numbers are as follows:
| Mohawk's Prodigious Free Cash Flow | ||||||
| Year | FCF | Present Value of FCF @ 10% discount rate |
||||
| 2008 | $500m | $455m | ||||
| 2009 | $560m | $463m | ||||
| 2010 | $627m | $471m | ||||
| 2011 | $702m | $480m | ||||
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