Wall Inc Forecasts That It Will Have the Free Cash Flows

question 1

Multiple Choice

Wall Inc. forecasts that it will have the free cash flows (in millions) shown below. If the weighted average cost of capital is 14% 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 firm's total corporate value, in millions? $$\begin{array} { l r r r } \text { Year } & 1 & 2 & 3 \\\hline \text { Free cash flow } & - \$ 20.00 & \$ 48.00 & \$ 54.00\end{array}$$

• A) $2,650.00
• B) $2,789.47
• C) $2,928.95
• D) $3,075.39
• E) $3,229.16

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Definitions:

Aerobic Capacity

The maximum rate at which an individual can consume oxygen during intense, all-out physical exercise, indicative of cardiovascular fitness.

Insulin

A hormone produced by the pancreas that regulates blood sugar levels by facilitating the uptake of glucose into cells.

Calcium

A chemical element important for bone and teeth health, muscle function, and nerve signaling.

Lean-Body Mass

The portion of body composition that is made up of muscles, organs, bones, and other tissues excluding body fat.