Ellis Manufacturing Inc

question 12

Multiple Choice

Ellis Manufacturing Inc.has estimated FCFF for each of the next five years and believes that subsequent cash flows will grow at a constant annual rate of 3% indefinitely.If FCFF are $4,500,000 in year five,and the cost of capital is 9%,what is the value in year five of these terminal value cash flows?

• A)$50,207,200
• B)$75,000,000
• C)$77,250,000
• D)There is not enough information to answer this question.

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