A Firm Forecasts of Cash Flows ($Millions) in Years 1

question 37

Multiple Choice

A firm forecasts of cash flows ($millions) in years 1 thru 4 to be $120, $130, 135, and
$137, respectively. If the project ends at the end of the fourth year, what is the horizon value given the company has historical growth of 3% and a discount rate of 10%? (answers in
$millions)

• A) $0
• B) $1.37
• C) $1.96
• D) $4.87

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