The Free Cash Flows (In Millions) Shown Below Are Forecast $$\begin{array} { l c c c } \text { Year: } & 1 & 2 & 3 \\\hline \text { Free cash flow: } & - \$ 20 & \$ 42 & \$ 45\end{array}$$

question 79

Multiple Choice

The free cash flows (in millions) shown below are forecast by Simmons Inc.If the weighted average cost of capital is 13% and the free cash flows are expected to continue growing at the same rate after Year 3 as from Year 2 to Year 3, what is the Year 0 value of operations, in millions? $$\begin{array} { l c c c } \text { Year: } & 1 & 2 & 3 \\\hline \text { Free cash flow: } & - \$ 20 & \$ 42 & \$ 45\end{array}$$

• A) $586
• B) $617
• C) $648
• D) $680
• E) $714

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