Kale Inc. forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 11.0% and FCF is expected to grow at a rate of 5.0% after Year 2, then what is the firm's total corporate value (in millions)? Do not round intermediate calculations. Year 1 Free Cash flow -$50 $115 O a. $1,682 O b. $1,295 O c. $1,833 O d. $1,530 O e. $1,446

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Kale Inc. forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 11.0%
and FCF is expected to grow at a rate of 5.0% after Year 2, then what is the firm's total corporate value (in millions)? Do not round intermediate calculations.
Year
1
Free Cash flow
-$50
$115
a. $1,682
O b. $1,295
O c. $1,833
O d. $1,530
e. $1,446
Transcribed Image Text:Kale Inc. forecasts the free cash flows (in millions) shown below. Assume the firm has zero non-operating assets. If the weighted average cost of capital is 11.0% and FCF is expected to grow at a rate of 5.0% after Year 2, then what is the firm's total corporate value (in millions)? Do not round intermediate calculations. Year 1 Free Cash flow -$50 $115 a. $1,682 O b. $1,295 O c. $1,833 O d. $1,530 e. $1,446
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