10. You have just learned that LCC has undertaken a major expansion that will change its expected free cash flows to -$10 million in 1 year, $20 million in 2 years, and $35 million in 3 years. After 3 years, free cash flow will grow at a rate of 5%. No new debt or preferred stock were added, the investment was financed by equity from the owners. Assume the WACC is unchanged at 11% and that there are still 10 million shares of stock outstanding. What is its horizon value (i.e., its value of operations at year three)? What is its current value of operations i.e., at time zero)? 11. What is its value of equity on a price per share basis? 12. If LCC undertakes the expansion, what percent of LCC's value of operations at Year 0 is due to cash flows from Years 4 and beyond? Hint: use the horizon value at t = 3 to help answer this question. 13. Based on your answer to the previous question, what are two reasons why managers often emphasize short-term earnings