2. Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost...

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2. Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of operations, in millions? Assume that the ROIC is expected to remain constant in Year 2 and beyond (and do not make any half-year adjustments).
Year: 1 2
Free cash flow: -$50 $100
a. $1,456
b. $1,529
c. $1,606
d. $1,686
e. $1,770

Robert · Accepted Answer

2. Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of 
capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value of 
operations, in millions?

2. Leak Inc. forecasts the free cash flows (in millions) shown below. If the weighted average cost of capital is 11% and FCF is expected to grow at a rate of 5% after Year 2, what is the Year 0 value...

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