Conundrum Mining Is Expected to Generate the Above Free Cash

question 12

Multiple Choice

$\begin{array}{lcccc}\text { Year } & 1 & 2 & 3 & 4 \\\text { Free Cash Flow } & \$ 12 \text { million } & \$ 18 \text { million } & \$ 22 \text { million } & \$ 26 \text { million }\end{array}$ Conundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 5% per year. If the weighted average cost of capital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 million shares outstanding, what is Conundrum's expected terminal enterprise value?

• A) $390.0 million
• B) $371.4 million
• C) $410.0 million
• D) $391.4 million

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