Gonzales Corporation Generated Free Cash Flow of $88 Million This

question 42

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 free cash flow in year 2?

• A)$1,779.15
• B)$95.04
• C)$1,881.8
• D)$102.64

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Definitions:

Outlier

An outlier is a data point that is significantly different from the others in a dataset, often lying far outside the range of the majority of the data.

Box and Whisker Plot

A graphical representation of data that shows the distribution's median, quartiles, and outliers.

Symmetric

Equally balanced or identical in size or shape on both sides of a dividing line.

Variation

The measure of how data points in a data set differ from the mean value of the data set.