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

---

Definitions:

Standardize

To make consistent by conforming to a set standard or protocol to ensure uniformity and comparability.

IQ Test

A standardized test designed to measure human intelligence and cognitive abilities in relation to an average population.

Norms

Shared expectations or rules within a society or group that dictate appropriate and acceptable behavior, values, beliefs, and attitudes.

Reproductive Freedom

The right to make autonomous decisions about one's own reproductive health, including the choice of whether to have children, when to have them, and the means to support their upbringing.