Bonza Corporation generated free cash flow of $88 million this year. For the next two years, the company's free cash flow is expected to grow at a rate of 8%. After that time, the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year. If the weighted average cost of capital is 10% and Bonza Corporation has cash of $100 million, debt of $300 million, and 100 million shares outstanding, what is Bonza Corporation's expected terminal enterprise value in year 2?
A) $1579.15
B) $1779.15
C) $1441.60
D) $1641.60
Correct Answer:
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