Determining the horizon value of akyol corporation


Akyol Corporation is undergoing a restructuring, and its free cash flows are expected to be unstable during the next few years. 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 6% beyond that point. If the weighted average cost of capital is 12%, what is the horizon value (in millions) at t=5?

A) $713

B) $757

C) $797

D) $839

E) $883

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Finance Basics: Determining the horizon value of akyol corporation
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