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Business, 19.12.2019 22:31 joejoefofana

Gonzales corporation generated free cash flow of $88 million this year. for the next two years, the companyʹs free cash flow is expected to grow at a rate of 10%. after that time, the companyʹsfree cash flow is expected to level off to the industry long-term growth rate of 4% per year. ifthe weighted average cost of capital is 12% and gonzales corporation has cash of $100 million, debt of $300 million, and 100 million shares outstanding, what is gonzales corporationʹsexpected terminal enterprise value in year 2?

a) $1384.24
b) $1245.82
c) $1107.39
d) $968.97

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