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:

Dominant Traits

Genetic characteristics that are expressed in an organism even when only one copy of the gene is present.

Incomplete Dominance

A genetic phenomenon where the phenotype of the heterozygote lies somewhere between the phenotypes of the two homozygotes.

Red-Green Colorblindness

A form of color vision deficiency where individuals have difficulty distinguishing between red and green hues due to the absence or malfunction of red or green retinal photoreceptors.

Recessive Gene

A gene that produces its characteristic phenotype only when its allele is identical.