Conundrum Mining Is Expected to Generate the Above Free Cash

question 5

Multiple Choice

Conundrum Mining is expected to generate the above free cash flows over the next four years, after which they are expected to grow at a rate of 6% per year. If the weighted average cost of capital is 12% and Conundrum has cash of $80 million, debt of $60 million, and 30 million shares outstanding, what is Conundrum's expected terminal enterprise value at year 4?

• A) $413.4 million
• B) $459.3 million
• C) $505.3 million
• D) $528.2 million

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Definitions:

Sensation

The detection, by sense organs, of physical energy emitted or reflected by physical objects.

Perception

The process by which individuals organize and interpret their sensory impressions to give meaning to their environment.

Sensory Stimuli

External factors or events that trigger sensory responses or reactions.

Wavelength

Wavelength is the distance between successive peaks of a wave, especially points in a sound wave or electromagnetic wave.