Use the Information for the Question(s)below

question 42

Multiple Choice

Use the information for the question(s) below.
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.Suppose 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
• E)$1,378.35

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Definitions:

Superego

(sue-per-EE-go) The moral system of the personality, which consists of the conscience and the ego ideal.

Angel

A spiritual being believed to act as a messenger of God, typically portrayed as a human figure with wings.

Conscience

An inner sense of right and wrong that guides a person's thoughts and actions.

Ego Ideal

The component of the personality composed of the standards of what one aspires to be, based on societal values and parental expectations.