Weighted average cost of capital-what is the horizon value

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Reference no: EM13874877

Barnette Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring. However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 5% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t = 5?

$719

$750

$797

$850

$883

Reference no: EM13874877

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