Projected Year: 1 2 3 4 5 6

EBIT 4.3 4.1 4.8 5.11 4.3 4.5

Depreciation 1.1 1 1.5 1.6 1.9 2.1

Tax 1.29 1.23 1.44 1.53 1.19 1.05

Net Capital Spending 0.8 0.9 1.2 1.16 2.2 1.2

Change in NWC 0.25 0.45 0.35 0.55 1.05 0.95

For Company ABC,the projected cash flow components (in $mil) for the next six years are as stated. WACC is 8%, and the growth rate is projected to be 4% for free cash flows during the horizon period after the terminal year. Given a EBITDA exit multiple of 18.5x, what is the implied perpetual growth rate for the Company ABC?

A.

4.00%

B.

4.96%

C.

3.37%

D.

4.37%

E.

5.37%