Given the Following Data,what Is the Enterprise Value of the Company

question 12

Multiple Choice

Given the following data,what is the enterprise value of the company? $$\begin{array} { | l | r | } \hline \text { Free cash flow (FCF) for year } 1 & \$ 50 \mathrm {~m} \\\hline \text { FCF for year } 2 & \$ 50 \mathrm {~m} \\\hline \text { Continuing value of FCF at t = 2 } & \$ 291.6 \mathrm {~m} \\\hline \text { Interest tax shield (ITS) for year } 1 & \$ 5 \mathrm {~m} \\\hline \text { ITs for year } 2 & \$ 5 \mathrm {~m} \\\hline \text { Continuing value of ITS at t = } 2 & \$ 17.5 \mathrm {~m} \\\hline \text { Unlevered cost of equity } & 8 \% \\\hline \text { Wacc } & 7 \% \\\hline \text { Midyear adjustment factor } & \$ 4 \mathrm {~m} \\\hline \text { Excess cash and investments } & \$ 18 \mathrm {~m} \\\hline\end{array}$$

• A)$301m
• B)$285m
• C)$349m
• D)$100m

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Definitions:

Social

Relating to society or its organization.

Cultural

Pertaining to the ideas, customs, and social behaviors of a society or group of people.

Economic

Pertaining to the production, distribution, and consumption of goods and services, and the management of money and resources.

Milgram's Study

A psychological experiment conducted by Stanley Milgram in the 1960s to measure the willingness of participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience.