A firm is considering acquiring a competitor. The firm plans on offering

$ 160 million for the competitor. The firm will need to issue new debt and equity to finance the acquisition. You estimate the issuance costs to be$10million. The acquisition will generate an incremental free cash flow of

$ 30million in the first year and this cash flow is expected to grow at an annual rate of 55% forever. If the firm's WACC is

13%, what is the value of this project?

A.

$ 205

million

B.

$ 308

million

C.

$ 256

million

D.

$ 359

million