Barnette incs free cash flows are expected to be unstable


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

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Financial Management: Barnette incs free cash flows are expected to be unstable
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