2) You estimate that the free cash flows of a firm will be $10million, $15million, $20million and $22million over the next four years. You estimate that the cash flows will grow at 5% thereafter. You have calculated the cost of equity capital = 15.5% and the pre-tax cost of debt capital = 7%. The average tax rate is 20%, and the marginal tax rate is 40%. The firm is currently operating with a D/E ratio of 1.0, and the target D/E ratio is 0.60. Calculate the value of the firm.

A) $290.68 million B) $386.92 million C) $264.86 million