If a Firm Has a Free Cash Flow Equal to $50

question 6

Multiple Choice

If a firm has a free cash flow equal to $50 million and that cash flow is expected to grow at 3% forever, what is the total firm value given a WACC of 9.5%?

• A) $679.81 million
• B) $715.54 million
• C) $769.23 million
• D) $803.03 million

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Definitions:

Beach Sandstone

A type of sedimentary rock formed from compacted and lithified grains of sand, typically found in coastal environments.

Carbonate Rock

A rock composed mostly of carbonate minerals, especially calcite and dolomite.

Dolostone

A rock composed mostly of the mineral dolomite.

Limestone

A sedimentary rock composed mainly of calcium carbonate, often formed from the shells of marine life.