A Firm Forecasts Its Free Cash Flow Will Be $100,000

question 53

Multiple Choice

A firm forecasts its free cash flow will be $100,000 one year from today.Free cash flows are expected to grow at 4% for the following 4 years.At the forecast horizon,the firm's growth results in an EBITDA forecast of $650,000.If its EBITDA multiple is 11 and the discount rate is 6%,what is the value of the firm?

• A)$6.6 million
• B)$5 million
• C)$5.8 million
• D)$5.3 million
• E)$4.9 million

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