Gere furniture forecasts a free cash flow of $40 million in year 3, i. e., at t = 3, and it expects fcf to grow at a constant rate of 5% thereafter. if the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3? a. $840b. $882c. $926d. $972e. $1,021

Option (A) is correct

Explanation:

Given that,

Free cash flow in Year 3, FCF3 = $40 million

FCF to grow at a constant rate, g = 5%

Weighted average cost of capital, WACC = 10%

Cost of equity = 15%

Therefore,

Horizon Value at year, t = 3:

     = $ 840

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explanation:

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the definition of a small business is an independently owned and operated company that is limited in size and in revenue depending on the industry. a local bakery that employs 10 people is an example of a small business. a manufacturing facility that employees less than 500 people is an example of a small business.