Question $11$

Analysts often value companies by forecasting a series of cash flows and

then estimating a horizon value. Suppose a firm forecasts a project's net cash

flows $($$millions$)$ in years $1$ through $4$ as $$120,$$$130,$$$135,$ and $$137,$

respectively. If the project ends at the end of the fourth year, what is the

horizon value of the project? Assume that the company had a historical

growth rate of $3$ percent and has a discount rate of $10$ percent.

$$0\mathrm{.}00$

$$1\mathrm{.}37$

$$1\mathrm{.}96$

$$4\mathrm{.}87$