Kedia Inc Forecasts a Negative Free Cash Flow for the Coming

question 16

Multiple Choice

Kedia Inc. forecasts a negative free cash flow for the coming year, FCF1 = -$10 million, but it expects positive numbers thereafter, with FCF2 = $25 million. After Year 2, FCF is expected to grow at a constant rate of 4% forever. If the weighted average cost of capital is 14.0%, what is the firm's value of operations, in millions?

• A) $200.00
• B) $210.53
• C) $221.05
• D) $232.11
• E) $243.71

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