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Company Forecasts the Free Cash Flows (In Millions) Shown Below

Question 6

Multiple Choice

company forecasts the free cash flows (in millions) shown below.The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3.Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions?
Year: 1 2 3
Free cash flow: -$15 $10 $40


A) $315
B) $331
C) $348
D) $367
E) $386

Correct Answer:

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