Question: Consider a company whose current free cash flow to the firm (FCFF 0 ) is $20,000. The FCFF is expected to grow at 6% p.a.

Consider a company whose current free cash flow to the firm (FCFF0) is $20,000. The FCFF is expected to grow at 6% p.a. for the next two years after which the FCFF is expected to grow at 3% p.a. indefinitely. If the weighted average cost of capital is 12%, the value of the firm is around:

a.

$235,894
b.

$294,023
c.

$36,843
d.

$241,865
e.

None of the above

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