Use the Information for the Question(s)below

question 22

Multiple Choice

Use the information for the question(s) below.
You expect CCM Corporation to generate the following free cash flows over the next five years: Following year five,you estimate that CCM's free cash flows will grow at 5% per year and that CCM's weighted average cost of capital is 13%.
-The enterprise value of CCM corporation is closest to:

• A)$396 million.
• B)$290 million.
• C)$382 million.
• D)$350 million.

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Definitions:

Insurance

A financial product that provides protection against financial loss resulting from specific risks.

Nature of Risk

The inherent features and characteristics of risk, including its potential to lead to negative outcomes or loss.

Conflagration Insurance

Insurance coverage designed to protect against losses from large and intensive fires that consume a wide area and a large amount of property.

Property Damage

Harm or destruction that affects the value or use of physical property.