Normaltown Corporation An Analyst Has Predicted the Free Cash Flows for Normaltown

question 93

Multiple Choice

Normaltown Corporation
An analyst has predicted the free cash flows for Normaltown Corporation for the next four years:

-After 2007,the free cash flows are expected to grow at an annual rate of 5%.The weighted average cost of capital for Normaltown is 12%.If the market value of the firm's debt is $100 million,find the value of the firm's equity.

• A) $201.81 million
• B) $213.00 million
• C) $231.43 million
• D) $271.20 million

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