Gonzales Corporation Generated Free Cash Flow of $88 Million This

question 15

Multiple Choice

Gonzales Corporation generated free cash flow of $88 million this year.For the next two years,the company's free cash flow is expected to grow at a rate of 8%.After that time,the company's free cash flow is expected to level off to the industry long-term growth rate of 4% per year.If the weighted average cost of capital is 10% and Gonzales Corporation has cash of $100 million,debt of $300 million,and 100 million shares outstanding,what is Gonzales Corporation's expected terminal enterprise value in year 2?

• A)$1,779.15
• B)$1,641.60
• C)$1,579.15
• D)$1,441.60

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Definitions:

Unearned Gym Memberships

Revenue received from gym memberships that have not yet been earned because the service has not been provided, recorded as a liability on the balance sheet.

Gym Memberships Revenue

Revenue generated from the sale of memberships or subscriptions to a fitness gym.

Prepaid Gym Memberships

Payments made in advance for gym services, representing a future expense for the gym that becomes realized as the service period elapses.

Prepaid Insurance

An asset account on the balance sheet that represents the advance payment of insurance premiums for future coverage periods.