Gonzales Corporation generated free cash flow of $81 million this year. For the next two years, the company's free cash flow is expected to grow at a rate of 9%. 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 11% and Gonzales Corporation has cash of $100 million, debt of $300 million, and 100 million shares outstanding, what is Gonzales Corporation's expected free cash flow in year 2?
A) $1429.79 million
B) $86.61 million
C) $1572.77 million
D) $96.24 million
Correct Answer:
Verified
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Q16: The discounted free cash flow model ignores
Q17: Which of the following statements is FALSE?
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Q18: Gonzales Corporation generated free cash flow of
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