Free Cash Flows (In Millions) Shown Below Are Forecast by Parker

question 2

Multiple Choice

free cash flows (in millions) shown below are forecast by Parker & Sons If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments) .

• A) $1,456
• B) $1,529
• C) $1,606
• D) $1,686
• E) $1,770

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